Generational finances

Generational finances - June 2019

Rising housing costs, soaring student debt and low wage inflation have left many millennials with stretched budgets. They may get regularly mocked as Generation Snowflake obsessed with spending on luxuries, but new research[1] shows they are focused on saving for retirement and want more support.

We know how the generational finance argument goes. Older Brits are hanging on to all the cash, property and pension deals. Younger Brits are discouraged by student loan hangovers and house prices and are avoiding the need to save for anything at all. With retirement a lifetime away, they are blowing any extra cash at the bar.

Unfair representation
But this is an unfair representation of the majority of millennials. The study found nearly seven out of ten (69%) of under-35s are saving into pensions either through work or in personal schemes, but they are struggling for help.

Over half (53%) wish their employer would explain pensions and benefits, and nearly a quarter (24%) say they find pension rules very confusing.

Success of auto-enrolment
Two thirds (66%) have signed up for workplace schemes, underlining the success of auto-enrolment. However, many recognise they are not saving enough, with 23% saying their current workplace or personal pension contribution is not high enough.
Just 24% admit to not having a pension fund currently, and 27% say pensions either do not motivate them or are not relevant to their generation.

Responsible attitude to retirement
It all adds up to a responsible attitude to retirement planning from millennials – over a quarter (26%) have found out more about their financial options and current situation, and say they see a financial adviser regularly.

Millennials are often under a lot of pressure to get on the housing ladder and pay off their student loans at the same time as trying to prioritise pension savings. Rules can be confusing, especially when you are early into your career, which is why we advise most savers to seek financial advice when possible. Employers can help to ensure they provide information and support around their workplace scheme.

Pension rules and the options available
Over a third (37%) of millennials believe that they are saving as much as they can but still don’t think it is enough for a comfortable retirement. An additional 16% don’t think they are ever going to be able to afford to retire.

However, millennial attitudes to retirement could stem from them not knowing enough about pension rules and the options they have available. Over two fifths (23%) admit that they do not know if they are on target for retirement saving, and a further 28% do not feel confident with money and financial matters.

Source data:
[1] Consumer Intelligence conducted an independent online survey for Prudential between 20–21 June 2018 among 1,178 UK adults