Saving for Retirement: Millennials vs Baby Boomers

Financial Throwdown: Baby Boomers, Millennials and Pension Saving

“Compared to today’s hard-up Millennials, Baby Boomers have sucked the marrow out of this country’s pension regime, its property market and its education system,” says Drewberry’s Pensions and Investments Expert, Neil Adams.

Neil continues, “Today’s retiring Baby Boomers are the wealthiest British generation yet and, based on the hurdles currently facing Millennials saving for retirement, they could be the richest generation this country ever produces.”

The raw numbers make grim reading for anyone currently under the age of 40, with only around 40% of those born in the early 80s owning their own home.

This puts Millennial home ownership at by far the lowest rate of any post-war generation in the UK. Those born in the early 80s also hold the dubious distinction of being the first post-war cohort to be worse off than their parents.

Thanks to eye-watering student debt, rapacious house prices, shrivelling company pension offerings, wage stagnation, cratering interest rates and the rise of the ‘Gig Economy’, is it any wonder that Millennials’ pensions aren’t the first thing on their mind?

Neil Adams
Pensions & Investments Expert at Drewberry

Gigged Out? Millennials Can’t Save for Retirement

You don’t have to look far for further evidence of the inter-generational divide in the country. Last year’s Drewberry Wealth & Protection Survey found that almost 20% of the UK’s 25-34 year-olds still had no idea of how they’ll fund their retirement while this rose to 30% for those aged 18-24. Worryingly, more than 15% of the former had no pension provision at all, while almost 38% of 18-24 year-olds were in the same boat.

The rise of the Gig Economy has also found Millennials working under obscure contracts who aren’t certain whether their workplace is obligated to arrange their pension or if they need to independently organise a self-employed pension, which means that they potentially miss out on significant growth to their retirement pot.

Even if their employer doesn’t offer a pension, Millennials have options. As the number of self-employed workers continues to rise, particularly among the Millennial cohort, it’s essential to engage in proper planning when it comes to pensions for contractors.

Unfortunately for Millennials saving for retirement, there’s no quick fixes on the horizon. Improving their financial prospects comes down to working hard and saving even harder.

“They should also manage their expectations accordingly,” Neil says. This is because, “with so many calls on the income of the average Millennial, little job security, wage stagnation and far less generous pension provision, they’re never likely to achieve the same level of wealth they’ve seen their parents’ and grandparents’ generations enjoy.”