Young pension savers are more likely to have enough money to fund their retirement if they are sensible with their cash, according to a new report.
International finance firm Aegon says research shows young savers are more likely to put money aside for their retirement if they are encouraged.
The study showed:
- Young savers are more realistic about their retirement aspirations
- They become regular savers as they often benefit from better financial education and advice
- Tax incentives, better financial services and more help from employers adds to their savings
Overall, the report concluded the under 30s are more likely not to have the funds for retirement due to a lack of opportunity to save rather than a lack of will.
Major change needed
The firm pointed out that while young retirement savers want to be financially ready for retirement, they still need help from employers, financial institutions and governments to make the environment right for them to put their cash aside throughout their working lives.
A major change that is needed is for flexible pension products that let young workers port their pensions when they change jobs as the modern employment trend is to move employers several times rather than stay in a job for life.
Another issue arising from the study was young savers want clearer information about how pension products work and regular statements showing how much they have saved and the likely cash pile they will have for retirement.
Young savers told the survey that they were better prepared and more realistic about their retirement finances than their parents – with nearly 60% expressing this view.
Can’t afford to save
Nevertheless, more than a third (37%) feel they will short of the money they believe they need for retirement, with more than a quarter (27%) predicting they will have less than half the cash they would want.
The result is 44% are not confident that they can retire when they wish and may have to continue working longer than expected.
The research also found 25% of under 30s are already regular retirement savers and 41% have indicated their wish to start regular pension saving. However 57% said they appreciate they need to save for retirement but cannot afford to with pressures on their finances from housing costs and the expenses of looking after a family.
“This report shows young people are taking ownership of funding their retirement and are prepared to do what is necessary to learn from the mistakes of their parents,” said a spokesman for the firm.
The key has always been and still is to start saving/investing early in life, be consistent, take advantage of any employer matching plan, avoid unnecessary risks with your nest egg and plan for multiple streams of income once retired (social security, pensions, dividends, part time work, etc.). There is a great deal of information about retirement available on the web and much of it is free. I recently found the site Retirement And Good Living that provides information on finances, health, retirement locations, part time work and also has a great blog of guest posts from around the globe about a variety of retirement topics.