Research findings from the Retirement Attitudes Programme says Millennials (22-39 year olds) are more confident about reaching reasonable retirement income than Generation X (40-60 year olds).
This seems to fly in the face of a commonly held view that it is more difficult to engage younger workers with saving for retirement than older workers.
This is not the first piece of recent research that shows auto enrolment has raised the profile of retirement savings with younger workers. The recent CIPD/ Close Brothers Workplace Financial Wellbeing, and the Dunstan Thomas Savings Habits of Millennials research pieces both confirmed that retirement savings are an important savings goal for Millennials.
It seems that younger workers are recognising the effect of savings over a longer period and the benefit this can have in building up a retirement savings pot. However, time alone won't make a difference if workers save only minimum auto enrolment savings levels.
Older workers don't have the same time horizon to build a retirement savings pot but there are other things that may help them: some may have some defined benefit pension to bolster retirement income; some may have other savings; even with 10 years to retirement, whatever additional amount they can add to their pension in that time, and the earlier the better, will help; extending their date of retirement; considering how their pension is invested and whether alternative investment funds are more suitable; consolidating multiple pensions pots and so on.
In short, Millennials have now started to engage with pensions but need to recognise that saving levels of 1% or 2%, even if over many years, won't build a suitable retirement pot. Generation X have a shorter timespan but still have some choices which could boost their retirement income. For both, the key will be that they understand their choices and how to make the most of them and pension education and engagement are a great way to support that.
Millennials confident about retirement incomes 3 April 2017 Millennials may be facing stagnating wages and difficulties getting onto the property ladder but they are surprisingly upbeat about funding their retirement. According to Network Research’s Retirement Attitudes Programme (RAP), 52% of those aged 22-39 are confident they will receive a reasonable income in old age, compared to 42% of those aged 40 – 60. The most common reasons given for this sense of security where the fact that younger workers had “started saving early enough” (38%) and had “access to a workplace pension” (35%).Although just a third (32%) of 22-39 year olds said they would put any spare cash they had at the end of the month into their pensions, older workers were even less likely to do so.