Millennials expect £100k pensions, but 60 per cent don’t save
Men expect to retire with £111,000 in their pension, and women expect £82,000. However, 65 per cent of 18-25s, and 53 per cent of 26-35s, say they aren’t saving into a workplace pension.
Only a third of those polled (31 per cent) said they could afford to save, while 44 per cent said they can’t afford the contribution now – but believe they will be able to in future.
The average salary young people say they would need to earn in order to be able to afford to make a pension contribution is £26,836. Of those saving, the average amount set aside each month is £22. If contributions continued at this level, this would deliver a pension pot of £18,000 over 30 years of saving, and £56,500 over 40 years of saving, assuming 5 per cent annual investment growth.
To achieve a pension pot of around £100,000, savers would need to set aside approximately £120 each month if they saved over 30 years, or £70 if they saved over 40 years (assuming 5 per cent annual investment growth. A £100,000 pension pot would buy a fixed income annuity of between £5,000 and £6,000 a year.
“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,” says Morten Nilsson, chief executive of NOW: Pensions.
“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.”