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Millennials and Gen Z expect to retire earlier with larger sums to support themselves
Millennials and Gen Z expect to retire earlier and to need more money to support their retirement compared to those aged over 55, a report has found.
Millennials and Gen Z now expect to retire at the age of 67, with their future retirement age expectations rising and their retirement money stalling, according to FT Adviser.
A report by the Standard Life Centre for the Future of Retirement has found that half of those employed in the UK expect to work beyond the retirement age and that only 51% of this group believe a state pension will still be available for everyone when they retire.
According to the responses of 6,000 people across the UK, 83% said the world felt more uncertain than it did a couple of years ago.
Only 41% of Gen Z have a workplace defined contribution (DC) pension, which is the lowest of the four generations.
Analysis by Rathbones also found that £3m would be a comfortable retirement money fund for Gen Z due to the impact of inflation.
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In contrast, millennial retirement planning shows 59% of the group have a workplace DC pension (the highest among the four generations).
They are also the most worried about energy costs (69%) and expect to work beyond the state pension age (54%).
Whereas Gen Z’s retirement planning is lacking, 48% of those surveyed reported that they were happy to be riskier with their money if it meant a chance at a higher return. This sentiment seemed to be echoed in the fact that a quarter of Gen Z participants currently have investments in cryptocurrency.
Across reports, it has been said that the current economic state for younger generations – namely housing costs, student debt and wider cost-of-living concerns – has made the challenge of funding retirement money significantly harder.
‘Advice and guidance play a crucial role’
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: “Those facing a gap between their retirement hopes and expectations can take meaningful steps to narrow it with the right support, however advice and guidance play a crucial role here too – from encouraging people to plan earlier and save more consistently if they can, to helping people find ways to manage financially in the years before the state pension begins.”
Foot also placed the onus on employers: “It isn’t only the pensions system that needs to adapt. Many people feel unable to continue working into their late 60s and beyond, so careers and workplaces must evolve if longer working lives are to be realistic and sustainable.
“That means embracing flexibility, bolstering support for carers, and encouraging non-linear career paths that allow people to retrain or step back and re-enter in later life.
“The growing retirement expectation gap highlights the need for a system that supports flexibility, resilience, and confidence in later life – underpinned by policies, employers and accessible advice that empowers people to achieve the retirement they hope for.”