Millennials are putting aside more money for retirement than the next older generation, according to a survey by the deVere group.
Clients from UK, Europe, Africa, Asia and the US took part in the poll by the financial advisory organisation. It found those born between 1980 and 1996, known as Millennials or Generation Y, put on average 19% of their income towards pensions last year, compared to 16% for those in Generation X, aged between 39 and 53.
The findings are similar to those published in a Resolution Foundation report from 2017, which found “men in their 40s will suffer a fall in their retirement incomes compared with today’s pensioners, but the generation behind them will see their incomes recover”.
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The deVere Group founder and chief executive Nigel Green described the results of the saving survey as “both encouraging and alarming”.
“It is encouraging that millennials – often falsely stereotyped for their sense of entitlement and for being content to pay for overpriced coffees and smashed avocado on toast – seem to be better at saving and more fiscally responsible than many would have thought,” he said.
“What is alarming, however, is that Gen X… workers are not saving nearly enough in order to be able to have a comparable lifestyle in retirement. And by the virtue of being older, they have less time to build wealth before leaving work.”
Money Marketing says “increasing life expectancy, a looming health and social care crisis and growing deficits in company pension schemes as reasons to be concerned with the low levels of pension saving”.
In 2017, the government was accused of “creating a lost generation of people in their late 40s who will simply be unable to afford to retire” after delaying plans to roll-out “auto enrolment” until the mid-2020s.
“Some nine million workers are now saving into a pension for the first time as a result of auto-enrolment – with their payments topped up with tax relief and an employer contribution,” says This is Money, and “although they have the right to opt out, few do”.
Former pensions minister Steve Webb, said that while extending auto-enrolment, in which workers are automatically defaulted into paying into a private pension scheme, to 18-year-olds was a good idea, the proposed pace of change was “shockingly lethargic”.
By contrast baby boomers, those born in the two decades after the Second World War, on the whole face no such financial shortfall when they retire. The research by deVeres found that on average those aged 54 to 74 put more than a third (35%) of their income aside for when they stop working.
Often known as the wealthiest generation, baby boomers have consolidated their position through “soaring property prices, inheritance and the prevalence of final salary pension schemes”, says Charlotte Ransom, chief executive and founder of Netwealth.
Analysis of the latest official data from the Office for National Statistics has revealed the extent of inter-generational inequality in the UK.
Those aged over 65 have experienced the greatest increase in their household wealth over the past decade, with a rise of 96%.
This group has seen their share of total UK household wealth soar to 36% since 2006, with one in five UK over-65s now classed as millionaires.
The Financial Times says “the wealth disparity has given rise to Bomad — the bank of mum and dad — with one recent survey estimating that parents helping with property deposits are behind up to one in four transactions in the UK”.
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