Pensions for young workers – Live now, save later??

world cup 2014 -footbal fans2Recent research suggests that for young adults focusing on their immediate lives is a higher priority than planning for their retirement.

In their recent study The Department of Work and Pensions (DWP) found that many young people are more likely to ‘live now and save later’ and give little regard to how they will fund their retirement years.

 

That’s hardly new news is it?  Over the years we have seen successive governments raising the school leaving age and encouraging school leavers to stay in the education system for longer.  Statistics also suggest these young people may not leave their parental home until they are 27 years old!  So is it any surprise, that retirement planning is not a hot topic to this generation?

However, workbased pensions are here and thankfully all those young people who are in employment (and eligible) will be encouraged to save towards their pension pot.  But, for the many young people who are unemployed, work part-time hours or have zero hour contracts, it must feel like the disparity between the haves and have nots continue to get wider.

So, if getting a job, leaving home and retirement planning wasn’t enough for the young folk to think about – with an aging population increasingly drawing on the state retirement fund,  here are some interesting facts to make them worry some more!

  • By 2021 it is predicted there will be more people over 80 than there are children under five years old.  In other words, the pension generation is growing faster than the newer recruits.
  • Since 1960 the average woman’s life expectancy has risen 7 years to 86 and the average man has risen 10 years to 80.  What will the average life expectancy be when you retire?
  • However by 2050, only 37 years from now (2013) the average 65 year old man will live another 22 years until he is 87.  Just think, the average man will be living off his pension for almost as long as he was working!
  • The current state pension is 65 for men and 60 for women. How many years will your pension plan have to last?
  • By 2020 the state pension age for women will be increased to 65 and it is proposed to rise by one year, every ten years from 2024.
  • Those born after 1980 will not retire until they are at least 68, making Britain have one of the highest retirement ages in the world.
  • The full basic State Pension in 2013 is approx £85 per week for a single person and £135 per week for a married couple.  At present an apprentice earns £107.20 for an average working week.  So ask yourself, who is low paid?

 

As a young person myself (i’m 22) of course I worry about my future.  But, i’m one of the lucky ones – I’m employed and have my own house!    But pension planning?  I’m just relieved that workbased pensions have been forced on me, at least when the government say I can retire – I may be able to afford to do so!!

Becca Bodman

For further information regarding work based pensions please contact us on 0117 9328145.  We are happy to help.