Under 25s face ‘pensions crisis’
The majority of young people are not preparing for their financial future, the results of a new study indicate.
Figures released by Tomorrow reveal that about four out of ten (39 per cent) consumers aged 18 to 24 aim to start thinking about planning for retirement “nearer the time”. Meanwhile, 20 per cent of people in this age group are looking to benefit from a family inheritance as the main means of supplementing their income in later life. Overall, some 59 per cent of under 25s do not intend to save money into a pension scheme which could result in difficulties making repayments on secured loans, credit cards and other types of borrowing.
Kirsty Macpherson, spokesperson for the retirement specialist, said: “Our research has revealed that, despite warnings from the government over the pensions gap and the plan to raise the state retirement age, the UK’s 20-somethings are still not aware of the dangers of planning too late for their retirement.” However, she claimed that if younger people give more thought to their future “then they could easily avoid an uncomfortable retirement”.
Ms Macpherson added that if guidance on monetary products was more widely available then consumers could offset any debt management difficulties in the future. “It is also clear from the research that those reaching retirement would benefit from professional financial advice in order to maximise their income,” the Tomorrow representative pointed out. Although a range of options are said to be available to Britons, they are often unaware of them. She also claimed that a home equity loan is a “viable option for many”, however this is not realised by many borrowers.
The news comes as research from the company reveals that just over a quarter (27 per cent) of those over the age of 55 believe that they are set to suffer from a shortfall in savings as they will be unable to support themselves from their pension pots alone when they retire. As a result, 18 per cent of consumers in this age group think that they will have to work part-time to supplement their income. Meanwhile, 25 per cent claim to be set to use home equity as a means of helping them financially during retirement.
According to the research, 23 per cent of the over 55s claimed to have started putting money away for their retirement after they turned 41, a stage Tomorrow claimed leaves “barely any time to save properly”. “With the young not learning from the mistakes of the older generations and not making adequate preparations for their retirement, the current pensions crisis looks set to continue indefinitely,” Ms Macpherson suggested.
In related news, a study by Barclays Wealth has indicated that two out of three of Britons do not have a will. The announcement came despite the financial services provider claiming that those who fail to set up a will could leave their families susceptible to higher rates of inheritance tax. Jeremy Arnold, head of Barclays Wealth Advisory, said: “It is vital that people look to act on these changes and plan their finances accordingly.”
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