Millennials’ spending to cost them at retirement
Millennial spending is currently £1,000 a month ahead of the state pension and yet few are engaged with pensions.
New research from Profile Pensions shows millennials spend an average of £1,770 a month. The State Pension would cover less than half – only 41% – of current expenses.
A Deloitte study showed millennials tend to job-hop, with half planning to leave their jobs within two years of joining. While they benefit from auto-enrolment, frequent job changes, alongside periods of freelance work and entrepreneurship do not help build a good pension pot.
The research shows that millennials tend to have more takeaways, spending an average of £110 a month – 17% of the monthly full state pension. Equally, they spend an average of £211 a month on nights out – equivalent to 32% of the state pension.
Profile Pensions suggested millennials need to take advantage of workplace pension schemes, as well as cutting back on spending. It said halving the monthly socialising budget could help them put an extra £100 into a private pension.
Michelle Gribbin, chief investment officer at Profile Pensions, said: “Although monthly expenses can vary from generation to generation, we wanted to showcase to those still climbing the career ladder the necessity of preparing for their financial future early, by highlighting just how much of their current lifestyles they would have to change in order to live comfortably in retirement.
“Although it can be easy to glance over small indulgences from time to time, it does all add up, and preparing for retirement is key for us all, no matter our age. In fact, as our results show, the earlier you can start saving, the more comfortable your retirement can be.”