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Young people rush to start the retirement savings race

22nd January 2015 Print

The younger generation is more likely to actively save into a pension than their older counterparts, according to data from the Friends Life UK Retirement Savings Map.

The study of over 18,000 people across the UK found that, of the 10% of 18-24-yearolds who have a pension, all are contributing to their fund. In comparison, one in seven (14%) of 35-44-year-olds who have a pension are not contributing anything at all. This savings inertia rises to one in six (17%) of those aged 45-54 and then almost a quarter (23%) of those aged over 55 who have a pension but are not saving anything at all into it.

There is also a disparity between what different age groups think they need to live on in retirement and the income they expect to receive. The average 18-24 year old expects to have an income of £17,440 per year in retirement, which would leave them with a potential financial shortfall of £4,840.21 per year, once living and housing costs have been factored in.

But those aged 45-54 expect to have an income of £18,474 per year in retirement, which would leave them with a shortfall of £6,489 per year.

Andy Briggs, Group Chief Executive at Friends Life said:  “I am heartened by our research, which shows people taking steps early to secure theirfuture by saving into a pension. Auto-enrolment will mean more people from a youngerage are encouraged and supported to start saving, so I expect to see this trend insavings behaviour accelerate. However, our research suggests that with age comessaving inertia, which may be a result of other priorities taking over, such as saving forweddings and spending money on children. Younger people need to harness theirsavings potential to kick start their retirement plans. As an industry, we need to focus onhelping consumers of all ages. We need to help those people worried about their level ofpensions saving and help them find the support they need to identify the best way tosave to suit their individual circumstances. Putting savings plans in place early willensure more people can secure a retirement they aspire to.”