Millions of Millennials Won’t be Able to Retire at 65 Based on Savings

  • Only a third (33 per cent) have made provision for their dependants after they die by taking out life insurance, with 48 per cent never planning to
  • 49 per cent of UK adults don’t know how much they have in their pension pot
  • Londoners are the biggest savers of any UK city, despite the high cost of living

New research by leading price comparison website, MoneySuperMarket, reveals many people in the UK haven’t even started thinking about saving for when they stop working. Most have no idea how much they need to save to live a comfortable life in the future and worryingly, nearly half are not considering buying life insurance to protect their dependants from debt and provide for their financial needs.

Using consumer research, MoneySuperMarket has built an interactive tool that people can use to see how prepared they are compared to their peers, with results tailored by the user’s age and gender.

The study reveals an overall lack of future-proofing across all age ranges. Despite 3 in 5 Brits (59%) acknowledging they have financial dependants, only a third (33%) currently have life insurance and nearly half (48%) don’t plan to take out a policy. This means that many dependants in the UK could miss out on the financial support they may need.

Pension pains

Retirement planning is an area often overlooked by Brits, according to the study. 48% of respondents have no idea how much is in their pension pot, while over a quarter (26%) simply do not have a pension. Within milennials, aged 18 to 34 years old, 1 in 3 do not have pensions.

The average pension pot can require as much as £370,000*. Despite this, millennials (18-34 year olds) in particular show a lack of knowledge about pension planning and vastly underestimate the amount needed to live comfortably in retirement, by 58% or £213,400. Women are also less likely to have a pension: nearly a third (29%) of women asked did not have one, compared to just a fifth (21%) of men. On average, Brits are underestimating how much they need to retire by nearly £170,000, which could lead to many being extremely financially unprepared when they begin to think of leaving employment.

North-South divide?

The study also identifies key regional differences with regard to savings and preparation for life after work.

Despite the high cost of living, Londoners are the biggest savers, with £14,611 saved on average. This is 55% more than those from the West Midlands, who have saved the least on average, despite being most aware of their pension pot amount. Only 35% of East Anglian respondents were aware of the actual amount in their pension pot.

Scottish and Northern Irish respondents are the most prepared for their futures, with the majority of respondents revealing that they have life insurance. Overall, respondents from the North of the UK underestimate the recommended pension pot amount by nearly 10% more than those from the South.

A spokesperson at MoneySuperMarket commented:

“Brits face all sorts of calls on their money and it’s easy to see why the cost of everyday living can trump longer-term objectives such as saving for retirement – especially if you’re not fully aware of how much you’ll need in retirement. But anyone who can get into the savings habit gives themselves a better chance of building up the sort of pension kitty that’s needed to fund a comfortable lifestyle once they stop work.

“Anyone who has dependents should make life insurance an absolute priority, as the financial consequences of an early death can be catastrophic. Policies can be set up to pay off a mortgage and other debt, and also to provide money to meet the day-to-day financial needs of those left behind if the policyholder dies. As a result, it’s important that people take the time to look for a policy that’s best suited for their needs.” 

To find out how financially ready for the next stage of life you are, MoneySupermarket have created an interactive online tool to allow you to compare your state of preparations to those in the same UK demographic.

So, how prepared are you for the rest of your life?