Could You Live on £22 a Day? If Not, Start Saving
It seems like Millennials have enough problems. Inflation, poor wages, and not being able to afford to buy a home. But that’s not all. Though they’re in the prime of their lives, the future still needs to be thought of. The future, means a pension. If you want a comfortable life when you leave work, you need to start saving right now. Otherwise, you face the risk of living on as little as £22 a day when you retire.
As the age of becoming home owner increases, the younger generation needs to have provisions in place. The older you are when you purchase your home, the older you’ll be when you pay your mortgage off. This means as well as your pension, mortgage repayments must be considered. Pair this with crippling student debt and rising interest rates and there’s a recipe for trouble. A whole generation ill-prepared for the future with no money to save and make it right.
Over the past few years, the amount of people saving up for pensions has increased. However, there are still not enough people thinking ahead and saving for their retirement. Just over half of the population have started saving for a pension. Either through the workplace pension scheme or by their own accord. This still leaves half of the nation unaccounted for. The majority of people without a pension plan unfortunately are the youth of today. Not thinking far ahead enough is understandable though when they are barely earning enough to make savings.Immediate financial priorities are put in front of pensions.
Despite huge campaigns and auto-enrollment, the figures of those with pension plans are poor. How can we protect against a generation on the breadline? Those who are unsupported by pension legislation are those that need the most help, including the self employed. In an era of freelance workers, something needs to be done to protect people from living on the breadline in old age.
By not saving and putting money into a workplace or individual pension, people will have to live solely off the state pension if they don’t start saving. The maximum allowance for a state pension is £22 a day. Criticisms towards millennials are that they don’t truly understand the cost of retirement, and aren’t making accurate provisions. Some say that they are relying too heavily on the fact the state pension will even exist by the time they come to retirement age. If the state pension goes, then we truly have a generation with no financial plans for retirement.
If you want any comparable standard of living when you come to retire, experts suggest setting aside around 12% of your salary. However, with the population living longer and longer, this means people need to save more,for their longer life. Young adults and millennials should be saving around 18% of their salary to accomodate for their longer lives.