Millennials Future Proof Finances: More professional advice is needed to help reach younger generations to set them on a path to financial wellness according to a pension expert who says there is a significant gap between the generations when it came to savings attitude and knowledge.
In June, Profile Pensions surveyed 1,178 adults in the UK to gain a better understanding of how younger generations feel about saving for retirement. According to the study, 30 percent of millennials are not currently saving into a pension pot, while 25 per cent said they found pension rules ‘very confusing’.
Young savers and the self-employed saw the largest proportional increases in financial vulnerability during the pandemic, rising by more than 40 percent, according to the Financial Conduct Authority. Since young people are now more likely to be much less comfortable retiring than their parents, it is important to start preparing for retirement at the beginning of their careers, rather than later on.
The findings showed that many of those who fall into the millennial age bracket of 23-38 feel uninformed about pensions.
The knowledge gap
- One in four millennials find pension rules very confusing and more than half (53%) said they wished their employer would explain pensions and their benefits to them.
- 23% of millennials admitted they weren’t sure if they were on target for retirement saving.
- More than a third (37%) believe they are saving as much as they can, yet still don’t believe it’ll be enough to retire comfortably on.
- A further 16% don’t think they will ever have enough money saved to afford to retire and 28% said they lack confidence with money and financial matters.
And whilst the introduction of the auto-enrolment scheme has almost doubled the participation of 22-29-year-olds saving into pensions, according to research by the Pensions Policy Institute, but there is still a long way to go.
Patrick Leahy, Founder of Elva comments:
“Studies like this show there is still a large amount of the millennial generation who feel uneducated when it comes to saving for retirement. Rules can be confusing, especially when you’re early in to your career, which is why we advise most savers to seek financial advice and financial coaching when possible.
Employers can help to ensure they provide information and support around their own workplace schemes, but it has to be presented in the right way, in ways that prompt action and that are engaging for younger people.”
As spending levels begin to settle back in line with Covid restrictions being lifted, the under-30s in particular have a huge job on their hands to get themselves into financially ‘healthy’ positions and this can only be achieved by reaching these people with relevant, uncomplicated educational financial coaching initiatives, ideally accessible on the move…or maybe on TikTok?!