According to Sanlam UK’s report, The Generation Game, 33% of under 45’s claimed to have less than £10,000 in their pension pot, while a quarter of them said they do not know the value or do not have one at all.
Furthermore, the report revealed that 43% of under 45’s are at risk of being left “high and dry” in retirement, as they estimate that a savings pot of £100,000 is enough to fund their retirement – the equivalent of just £5,400 per year. In order to generate a retirement income of £26,000 per annum, savers would need to deposit £480,000 into a pension pot by the time of retirement.
However, Sanlam found that 57% of under 45’s are aware that they will need to save more if they are going to meet their retirement target, but just 13% think it is actually achievable. Despite this, around a third of them said they have “put off” saving as they expect to receive an inheritance of more than £50,000 and are therefore “living in the now”.
The firm argued that this is not just an issue with the under 45’s generation, as its research illustrated that one fifth of those over the age of 55 do not have currently have any pension savings, with a further 22% unaware of the current value of their workplace pension scheme.
Sanlam UK senior wealth planner Carl Drummond commented: “Our research confirms what we have long-feared; that people of all ages are simply not engaged enough with their pension and their financial security in retirement. Despite the best efforts government and many employers, the message is still not getting through that people need to think carefully about how much money they will need in retirement and start saving accordingly.
“Our research highlights that many under-45s see inheritance as a panacea, but that’s a big gamble. Money being passed down from parents or grandparents is often split-up among other family members or, increasingly, used to pay for care costs meaning the under-45s might not inherit what they expect.”
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