A third of young savers not saving enough for retirement

A third (33 per cent) of savers between the ages of 18 and 34 do not believe that their pension will be enough to fund their retirement, research by Canada Life has found.

Furthermore, 21 per cent of this age cohort were unsure as to how long their retirement savings will need to last.

The lack of confidence in their level of saving led to 56 per cent of those surveyed saying that they expected to work until they were at least 70 years old.

Just over a quarter (27 per cent) predicted that they would retire before the age of 70, while 14 per cent said that they did not know when they would be able to retire.

“Despite the clear success of auto-enrolment, and the very low number of people opting out, there is a widespread lack of engagement around retirement and savings,” commented Canada Life technical director, Andrew Tully.

“There is general agreement the default 8 per cent contribution rate won’t provide a decent standard of living in retirement for many people. Although retirement may feel like a lifetime away, this may be why such a large percentage of 18 to 34 years olds have seemingly resigned themselves to work well beyond the current state pension age. 

“As we see the state pension age moving ever upwards, we will see big shifts in how people prepare for and enjoy retirement with many more remaining economically active beyond traditional retirement age.”

Tully predicted that this would create a “new set of challenges” for pension providers, employers and savers.

“Traditional lifestyle investment models will be less relevant, while employers will need to think about how they support an ageing workforce,” he added.

Canada Life also calculated that, as the state pension age for 18 to 34 year olds was likely to be at least 68, there will be a retirement funding gap of at least 18 years on average for this age group.

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