Old Age Pen-shunners
- Millennials set retirement fund target at £300K+ and retirement age at 56
- Current savings habits mean that millennials would need 125 years to reach their retirement target and could run out of money after just 4 years and nine months
- Two thirds of pensioners now struggle to make ends meet and regret not saving sooner
- Barclays aims to help millennials achieve their retirement goals in the future by taking control of their finances today
British millennials have set themselves an ambitious savings target of over £300K before they retire, a figure they believe will grant them ‘comfort’ in their golden years, with many aspiring to travel the world, own a second home and eat out multiple times a week.
However, if they want to make these future goals a reality, new research from Barclays suggests they need to super-charge their saving as the typical millennial currently puts aside £200 a month or less, with a fifth saving nothing at all. Based on these saving habits, the reality is that it will take 125 years to reach their retirement fund target, long after turning 56, when the average millennial plans to retire. If they are to accomplish this goal, then they need to start saving more regularly and from today, as Clare Francis, Savings and Investments Director at Barclays, explains:
“It’s great that millennials have given themselves a target, as it shows they are thinking about their long-term futures. We know it’s often tempting to put off saving for retirement – it can feel like an age away and not a priority when you’re in your twenties and already under pressure to make ends meet. But the sooner you can start putting money away, the better.
“Whether it’s starting to put money aside in a cash ISA, an investment ISA, or saving for a house deposit through a Help-To-Buy ISA, there are plenty of options to help today’s millennials plan for their dream retirement. Barclays is here to support that ambition and we have a range of competitive products to help them on that savings journey. We urge millennials to make the most of their ISA allowance before tax year end on April 5th.”
The consequence of not saving early
In a parallel study of 1,000 retirees, two thirds (60 per cent) admitted that they did not save enough earlier in life and are now struggling to make ends meet. Based on a reluctance to make cut backs and instead focus on short term desires, the research shows that millennials are also set to struggle financially in later life.
The average millennial saving £200 a month can realistically expect to have £52,800 by the time they reach their ideal retirement age. This means that the half of millennials hoping to one day own a second home and travel the world are going to struggle in the future, unless they start changing their savings habits today.
The harsh reality of overspending
As the table below demonstrates, even the more modest ambitions of eating out, going on an annual cruise, having a weekly trip to the cinema and holding a gym membership could make a real dent in your retirement savings, currently costing an average of £10,600 a year. Not including other financial commitments, based on current costs and projections, this could mean millennials run out of money just four years and nine months into their retirement.
Clare Francis adds: “If millennials want to achieve their later life ambitions, it’s critical they start planning today and make the most of the support available. For instance, two-fifths currently ignore their work pension schemes, which alone could be damaging to their future finances and something we recommend they consider.
“But there are plenty of other options available to them. ISAs are tax free and benefit from competitive interest rates, so can often be a sensible financial decision. For those with a little more in the bank, our Smart Investor investment ISA could be a great way to make your savings work harder. Whatever they decide, we strongly recommend millennial savers consider all options before April 5th to start paving the way for their dream retirement.”
To assess your current retirement savings trajectory, check out the Barclays retirement income calculator: https://www.barclays.co.uk/savings/retirement-calculator-tool/
If you’re interested in making your savings work harder, consider Barclays’ range of Cash ISAs and Investment ISAs by accessing the links below:
- Cash ISA – https://www.barclays.co.uk/savings/isas/
- Investment ISA – https://www.smartinvestor.barclays.co.uk/invest/accounts/investment-isa/features.html