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Millennials expect to retire at 63, a year earlier than the survey average of 64, and a whole seven years earlier than forecasters expect the state pension age will be for this age group.
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Worryingly, less than a fifth (19%) are concerned that they will not be able to retire at their target retirement age.
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Over a quarter (26%) of them already plan to continue working either part time, or as long as they are able to in retirement.
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They have wildly optimistic retirement income expectations, hoping to receive an annual income in retirement of £50,200, as much as £35,200 beyond the £15,000 they are on track to receive. People aged between 55 and 65 expect a still inflated but more realistic £26,000.
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Despite high expectations, they are the least engaged with their pension savings.
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Nearly half (49%) have never done anything to review or affect plans for retirement (compared to UK average of 38%).
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Millennials are also less aware of recent reforms. Just 58% have heard of last years' pension freedoms, compared to 72% of those aged between 45 and 54, who are nearer retirement.
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A quarter of Millennials expect that the state pension will be their most significant source retirement income, half the roughly 50% that currently rely on it as their main financial crutch in retirement.
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Recent ONS figures show that young couples and families in the UK are financially worse off compared with a decade ago, while recent retirees’ incomes have increased over the same period. In addition, unlike the property rich baby boomers, they don’t have the safety of a property to fall back on, with the housing ladder close to disappearing for millennials according to analysis from the Resolution Foundation.
Steven Cameron, Pensions Director at Aegon UK: “When it comes to saving for retirement, Millennials face a totally different set of challenges from their predecessors. Gone are the final salary schemes that many people took for granted in the past as their retirement solution. These have now largely been replaced by defined contribution pensions which place the emphasis on the individual to ensure they are saving enough. On a positive, young employees will be auto-enrolled into a pension scheme with an employer contribution with the promise of greater flexibility to use the proceeds as they see fit on reaching retirement.
“This new pension flexibility is good for many, but requires much higher levels of individual responsibility, and the fear is that many Millennials are failing to save appropriately now to shore up their later years. Our own research has found that this age group are the most optimistic about retirement, but unless adequate saving starts early, this optimism is misguided. Millennials remain the group with the least engagement with their pension, and the lowest expected retirement age, despite suggestions that they may be 70 before the state pension kicks in for them. As an industry we have a key role to play, in collaboration with the government, to galvanize millennials at the start of their working life to see early saving as the key to unlocking a happy retirement.”
*Research sampled 3890 UK National representative people and was conducted by Watermelon Research between 29 February and 7 March 2016.
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