Perhaps it’s because I’m of the YOLO (You only live once) generation that surveys on young people not prioritising saving for a retirement irk me.
Today, another one has landed in my inbox. It reads: “Research by Alliance Trust Savings has found that for women under 34 saving for a holiday is more important than saving for retirement”.
Firstly, the notion that young people prioritise something in the near future over something so far away is nothing new. Time and time again, these snapshots of millennials reveal it to be the case. I don’t think this will ever change. But, moreover, why should it change?
Alliance Bernstein found that the top financial priorities for women under 34 are rent/mortgage, day-to-day essentials, holidays, saving for emergencies and then retirement.
Once women reach 35, according to the survey, retirement is bumped up the list to third position, behind mortgage/rent and day-to-day essentials. It may not please the pensions industry, but to me it seems logical, and in a way, sensible.
You only live once. This is a phrase I batted around a lot when, at the age of 23, I spent my life savings on travelling. If I hadn’t spent them all, by now I could be on the property ladder, and be in a position to save more for my retirement. But alas, I was young, and a pension was not on my radar. If it had been, I would have still done the same.
I realise that I’ve pitched up my tent in the stereotypical millennial camp, but I do save. I have three separate savings accounts, as well as my pension, in which I save for a house, holidays and emergencies. Each month, the majority goes into my Help to Buy Isa, followed by my holiday fund, then emergencies, with the least going into my pension. As I get older, this too will change for me.
In contrast to many of my peers, I am strikingly aware of how much is in my pension fund, and how little this will leave me with if I don’t do something about it. I’m actively engaged. I have an app on my phone, and log on several times a week to check the value. I regularly log on to my provider’s portal to see what I need to contribute to give me a decent retirement income.
Based on my provider’s portal, which is only an estimator, I would need to invest around 80 per cent of my net income to hit a target retirement income that is 10 per cent lower than my current gross salary. This, however, does not take into account employer contributions and tax relief. But, even so, it seems so unobtainable that I’ve reserved myself to a retirement spent in poverty, so I might as well live a little in my youth.
That is not entirely true. And once I have achieved my other priorities, then saving for retirement will be pushed up the list. But right now, I want to own a home, and before that, I want to go back to Australia whilst I still can.
There are many in the industry who worry that people do not understand that the pension they have been auto-enrolled into will most likely not give them enough to live on, unless they significantly increase contributions. I agree, which is why developments like the pensions dashboard are so important, so too, are tools which can show how much you need to save to be able to live comfortably.
However, I don’t think any of this will change the behavioural habits of young people, because regardless of which generation you are born in, when you are young, you have other priorities than saving for retirement. Now, show me a survey that proves me wrong.