Millions of under-30s could be in danger of retiring in poverty because a “cocktail” of financial strains are making it difficult for them to save, and because government pension policies don’t go far enough to help them, according to an alarming report released by Investors Chronicle.
While financial experts urge people to start saving for retirement as soon as they enter the workforce, the report shows that 20-somethings in Britain are struggling to afford to start pension saving, putting them on a collision course for a huge pension shortfall come retirement age.
The report, which is authored by a 25-year-old award winning personal finance writer at Investors Chronicle, looked into three major factors contributing to the lack of pension saving from the younger generation; a lack of disposable income, failings in the current pension scheme, and suspicion and lack of understanding of pensions.
To coincide with the report, a survey of more than 1,000 under 30s also released today shows that more than one in five don’t trust pensions, while less than half are confident the government will provide them with a basic state pension when they retire.
Around 60% worry that they are not saving enough to support themselves in retirement, however, the survey also shows there is also a belief that other financial issues such as saving for a house and general savings are more important than pensions.
Almost 40% said they haven’t really thought about a pension as it’s too far into the future and they’re too young to worry about that now.
Furthermore, almost a third say they have so little money as it is, saving for a pension is the least of their concerns, while one in six, don’t think they’ll start thinking about saving for a pension until they’re in their 30s.One in seven say they have a big student loan to pay off and until that’s done they won’t even think about their pension.