Retirement is a time in our lives that we all expect, but very few give any thought to until that time draws near. In previous generations common phrases such as;

“Save for a rainy day”

“Money doesn’t grow on trees”

Or even

“A penny saved is a penny earned”

created a very different mindset. Young adults were encouraged to saved a percentage of what they earned by parents in order to ensure a secure future.

In modern times the financial picture is very different. The current generation of young adults….Millennials have grown up during far more prosperous and opportunity rich time.

 

Millennial Financial Experiences

The average Millennial has grown up with an entirely different financial picture from that of their parents. The only financial crash they have ever experienced was 2008, where the average Millennial would have been 18 years old. Statistics show the crash encouraged Millennials to seek higher education to avoid this happening to them, if anything it helped to carve a better opportunity.

Millennials were also able to ride the dotcom bubble through the earliest part of their careers which are typically more difficult. With businesses moving online those who were technology literate were able to jump the traditional career progression ladder.

Alongside the rise of minimum wage, many Millennials avoided the early career growing pains previous generations felt.

This created a general sense of arrogance which has only been fuelled by the rise of apps, startups, social media and other “skip the ladder” forms of Millennial success stories.

 

How does all of this impact Millennials and retirement?

“Pressure makes diamonds” is a common phrase. Anything that requires you to suffer tends to build a better you in the future.

When things are too easy or comfortable, familiarity to prefferable conditions can become a safe home.

Previous generations have endured far greater financial difficulties than Millennials. Because of this they appear to appreciate the value of money far greater.

University fees is a great example of this. Instead of working hard to fund their education, most Millennials experienced a culture where loans and the bank of Mum and Dad kept them alive. In the meantime most slept in, survived on ready meals and spent the majority of their money on partying.

Millennials may have left with impressive degrees, but their day to day experiences trained them to believe life was easy and money will always be available from alternative sources.

 

The Impending Danger 

With the cost of living rising year by year and life expectancy lengthening, it does not take a genius to figure out that we will either be retired for longer, or the retirement age will naturally increase.

However it has been found that humans are not neccessarily living longer due to an increase in health, but rather we are being kept alive longer by medicine and care.

This is important because it means the average person may live longer, but perhaps will not be in good enough condition to work for an additional 10 years. It must also be said that the average person does not want to work forever.

With this being said it would be correct to assume that future generations will be retired for longer especially millennials.

So with life expectancy increasing and the cost of living rising, how are we shaping up? You would assume pension contributions have followed suit in order to compensate, but the reality of what is coming is cause for concern.

 

Pension Problems

The average person has £50k in their pension pot. Those aged 55-65 have an average pot of £105k.

Sounds like a lot of money, yet a pot of £260k is recommended for the lowest level of comfortable living as it returns £16k per year.

The average person according to data can expect to live on £4k – £5k per year with current pension pot amounts.

Do not forget, these are figures for generations of people who have a greater understanding and respect for saving. One can only imagine how bad it is going to be for Millennials due to their “we’ll cross that bridge when we come to it” mindset.

Auto-enrolment, a government scheme set up because of this growing concern will help. However auto-enrolment alone will certainly not enable an individual to reach the minimum requirement of £260k. A bigger concern is the fact that a percentage of young people have opted-out of auto-enrolment as they would prefer to spend that money now, which pretty much outlines the root cause of what is sure to be a future issue.

 

Prediction

With all considered it is not hard to believe that the average Millennial will either do one of two things;

1. Retire and live on less than £10k per year (Not likely considering current Millennial spending habits)

2. Continue working into their elderly years if possible.

This is going to create a dire scenario where the UK has an ageing workforce who cannot retire and may be forced to worked until the day they die.

Add to this the facts; most will not be able to work up until this point and businesses will not want to keep older employees and we have a major mess on our hands.

 

Solution?

Although it may seem all doom and gloom, solutions are out there. They are not hard to do, but they do require discipline something the majority of Millennials have been able to survive without up until now.

The average Millennial is currently 29 years old. By the time these people reach retirement age you would expect that figure to be sat at around 70 years old with the constant increase in life expectancy.

This means that the average Millennial has roughly 40 years until they require their pension pot health permitting.

By contributing just £3 per day to your pension pot, due to the compounding effect, one can expect to have an extra £110,367 in retirement. Sacrificing no more than a coffee per day could very likely secure your financial future.

It seems as though Millennials have fallen on their feet once again. They may be in danger but their youth provides time to turn things around. Whether they take these warnings seriously and decide to act is sadly a hopeful maybe.

 

 

Disclaimer: Our articles are for informational and educational purposes only and do not constitute professional financial advice. We would recommend that you always seek independent advice which is tailored to your individual circumstances. Our content is based on our opinion and do not reflect the ideas, ideologies, or points of view of any organisation that we are affiliated with. The information is authentic to the best of our knowledge and as such maybe prone to errors and absence of some key information.

 

 

Retirement is a time in our lives that we all expect, but very few give any thought to until that time draws near. In previous generations common phrases such as;

"Save for a rainy day"

"Money doesn't grow on trees"

Or even

"A penny saved is a penny earned"

created a very different mindset. Young adults were encouraged to saved a percentage of what they earned by parents in order to ensure a secure future.

In modern times the financial picture is very different. The current generation of young adults....Millennials have grown up during far more prosperous and opportunity rich time.

 

Millennial Financial Experiences

The average Millennial has grown up with an entirely different financial picture from that of their parents. The only financial crash they have ever experienced was 2008, where the average Millennial would have been 18 years old. Statistics show the crash encouraged Millennials to seek higher education to avoid this happening to them, if anything it helped to carve a better opportunity.

Millennials were also able to ride the dotcom bubble through the earliest part of their careers which are typically more difficult. With businesses moving online those who were technology literate were able to jump the traditional career progression ladder.

Alongside the rise of minimum wage, many Millennials avoided the early career growing pains previous generations felt.

This created a general sense of arrogance which has only been fuelled by the rise of apps, startups, social media and other "skip the ladder" forms of Millennial success stories.

 

How does all of this impact Millennials and retirement?

"Pressure makes diamonds" is a common phrase. Anything that requires you to suffer tends to build a better you in the future.

When things are too easy or comfortable, familiarity to prefferable conditions can become a safe home.

Previous generations have endured far greater financial difficulties than Millennials. Because of this they appear to appreciate the value of money far greater.

University fees is a great example of this. Instead of working hard to fund their education, most Millennials experienced a culture where loans and the bank of Mum and Dad kept them alive. In the meantime most slept in, survived on ready meals and spent the majority of their money on partying.

Millennials may have left with impressive degrees, but their day to day experiences trained them to believe life was easy and money will always be available from alternative sources.

 

The Impending Danger 

With the cost of living rising year by year and life expectancy lengthening, it does not take a genius to figure out that we will either be retired for longer, or the retirement age will naturally increase.

However it has been found that humans are not neccessarily living longer due to an increase in health, but rather we are being kept alive longer by medicine and care.

This is important because it means the average person may live longer, but perhaps will not be in good enough condition to work for an additional 10 years. It must also be said that the average person does not want to work forever.

With this being said it would be correct to assume that future generations will be retired for longer especially millennials.

So with life expectancy increasing and the cost of living rising, how are we shaping up? You would assume pension contributions have followed suit in order to compensate, but the reality of what is coming is cause for concern.

 

Pension Problems

The average person has £50k in their pension pot. Those aged 55-65 have an average pot of £105k.

Sounds like a lot of money, yet a pot of £260k is recommended for the lowest level of comfortable living as it returns £16k per year.

The average person according to data can expect to live on £4k - £5k per year with current pension pot amounts.

Do not forget, these are figures for generations of people who have a greater understanding and respect for saving. One can only imagine how bad it is going to be for Millennials due to their "we'll cross that bridge when we come to it" mindset.

Auto-enrolment, a government scheme set up because of this growing concern will help. However auto-enrolment alone will certainly not enable an individual to reach the minimum requirement of £260k. A bigger concern is the fact that a percentage of young people have opted-out of auto-enrolment as they would prefer to spend that money now, which pretty much outlines the root cause of what is sure to be a future issue.

 

Prediction

With all considered it is not hard to believe that the average Millennial will either do one of two things;

1. Retire and live on less than £10k per year (Not likely considering current Millennial spending habits)

2. Continue working into their elderly years if possible.

This is going to create a dire scenario where the UK has an ageing workforce who cannot retire and may be forced to worked until the day they die.

Add to this the facts; most will not be able to work up until this point and businesses will not want to keep older employees and we have a major mess on our hands.

 

Solution?

Although it may seem all doom and gloom, solutions are out there. They are not hard to do, but they do require discipline something the majority of Millennials have been able to survive without up until now.

The average Millennial is currently 29 years old. By the time these people reach retirement age you would expect that figure to be sat at around 70 years old with the constant increase in life expectancy.

This means that the average Millennial has roughly 40 years until they require their pension pot health permitting.

By contributing just £3 per day to your pension pot, due to the compounding effect, one can expect to have an extra £110,367 in retirement. Sacrificing no more than a coffee per day could very likely secure your financial future.

It seems as though Millennials have fallen on their feet once again. They may be in danger but their youth provides time to turn things around. Whether they take these warnings seriously and decide to act is sadly a hopeful maybe.

 

 

Disclaimer: Our articles are for informational and educational purposes only and do not constitute professional financial advice. We would recommend that you always seek independent advice which is tailored to your individual circumstances. Our content is based on our opinion and do not reflect the ideas, ideologies, or points of view of any organisation that we are affiliated with. The information is authentic to the best of our knowledge and as such maybe prone to errors and absence of some key information.