As 2009 draws to a close new research from Friends Provident suggests it’s not all doom and gloom as younger generations set the standard for a healthier financial future. With nearly one third (31%) of 21-29 year olds prioritising paying off debt over saving for a house (25%) or funding a career break (11%), we could be seeing the start of a more financially responsible Britain.
The message that people need to start saving for retirement appears to be sinking in with nearly half (44%) of this so called ‘generation Y’ already paying into a company pension. Over one third (35%) also intend to start contributing to a pension before they hit 30. Furthermore the research revealed 21-29 year olds plan to use additional saving vehicles for their retirement including ISA’s (43%) and investment (equity) portfolios (35%). Only 11% don’t intend to use a pension for retirement.
James Ward, director of UK Corporate said: In the current economic environment it is very uplifting to see that the younger generations are taking financial matters into their own hands. It is encouraging to see a large percentage of twenty-something’s taking responsibility for their finances and planning for their future at such a young age and rightly so. What is particularly inspiring is that over half (59%) of 26-29 year olds are in fact already paying into a company pension scheme. This can only be a good thing and if such laudable behaviour continues we could see a healthier or brighter picture of retirement in the decades to come.”
The study also highlighted the need to take responsibility in planning for retirement and this younger generation of savers want to take control themselves and not rely on the state pension.
This comes as no surprise given that over half (58%) of twenty-something’s do not agree that the state pension will be enough to support them by the time they retire. Only 14% think it will be enough, and these may be the ones who will struggle in later years.
James Ward, director of UK Corporate continues: “With the Chancellor’s pre budget report adding yet another unwelcome layer of complexity to pensions in the UK we need to continue to highlight the benefits of saving. It is encouraging to see some of that message is being understood and younger generations are grasping the nettle and getting their finances in order.”