More than half of 18-35 year-olds haven’t started saving for retirement, research by NOW: Pensions has shown.
The survey of 2,000 young adults found that 58% are yet to start making monthly contributions to a pension pot. Almost two thirds (65%) of 18-25 year-olds and 53% of 26-35 year-olds aren’t saving into a workplace pension scheme.
Despite this, the average 18-35 year-old expects to have around £95,000 to live on in retirement. Men think they’ll have £111,000 and women estimate they’ll have £82,000.
The survey found:
- 31% said they could afford to save into a pension while 44% say they can’t afford to at present
- the average salary young people think they need to earn before saving into a pension scheme is £26,836.
Of those that are saving, the average monthly contribution is £22. This would result in an £18,000 pension pot after 30 years of saving and £56,500 over 40 years if the investments grew 5%.
Savers need to contribute around £120 every month over 30 years and £70 each month over 40 years to achieve a pot of £100,000.
Morten Nilsson, chief executive of NOW: Pensions, said:
“Auto-enrolment will go a long way to getting young people into the savings habit but the sooner they start saving and the more they set aside each month, the easier it will be.
“While a £100,000 pension pot seems like a healthy amount, men aged 25 today are likely to live until they are 88 and women are likely to live until they are 91 which means that this pot has to fund around two decades of retirement.”