Retirement age will get 'more and more unachievable' unless you act now, Britons warned

New research has revealed that one in five Britons aged between 22-29 are not contributing to their pension, and only 15.6 percent of millennials are contributing seven percent or more towards retirement. In comparison, 26 percent of people aged between 40 and 54 are contributing at least seven percent into their pension pot. Savers between the ages of 22 and 29 are more likely to contribute around three to four percent, which may not be enough over the long-term to give them adequate retirement savings.

The study, conducted by Investing Reviews, looked at how Brits contribute to their pensions. It analysed UK data relating to workplace pensions to reveal enrolment rate by region, age group and occupation as well as where Great Britain stands globally in terms of workplace pensions.

The research also found the UK was amongst the countries providing the lowest percentage of pre-retirement earnings with 28.5 percent, which is less than half of the global average of 59.8 percent.

Simon Lister, a financial author for Investing Reviews, commented on the research.

He said: “The average age of retirement is on the rise, so it is of utmost importance to get your finances in line and start contributing to your pension. One in five Brits between the ages of 22 – 29 aren’t contributing towards their pension, which is alarming!

READ MORE: Over 60s face paying for prescriptions in NHS change – who can get them for free?

© GETTY millennial pension saving

“The age of retirement is just going to keep getting more and more unachievable if you don’t contribute to your pension as early as possible.

“There isn’t enough education for pensions and state pensions, Britons are going to Google to get their answers for pensions, many have no idea how or when/if they will retire.

“As a country, we are amongst the worst in the world for pre-retirement earnings in retirement with just 38 percent. Stats like this are doing nothing other than contributing to the retirement anxiety felt by many.

“Much has been said about the triple lock state pension and what is coming up around the corner. Many are concerned about what their pension will look like, over 150,000 have been searching ‘Triple Lock State Pension’ to see how their pension will be affected, and more education is needed to help those who are unsure.”

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Zoe Dagless, senior financial planner at Vanguard UK spoke exclusively to Express.co.uk to provide her advice for young people who may not be saving enough towards their pension.

She said: “Time is an asset when saving for retirement- one that people in their 20s have plenty of! As an example, based on a hypothetical annual market return of six percent, if you start investing £100 per month at the age of 20 and increase that by £25 each year, you’ll have saved nearly £350,000 by the time you hit 50.

“Increase it by £50 a year and you’ll have more than £600,000. The secret? Our old friends ‘time’ and ‘compounding.’

“To work out whether you’re currently on track, it’s worth making a back-of-the-envelope calculation, based on when you think you might like to retire and on what level of income. Working out that figure will almost inevitably lead you to the realisation that you’re unlikely to be able to hit your target using a savings account.

“While your cash may nominally be safe, current rock-bottom interest rates are unlikely to generate the returns you need to build a decent nest egg.

© Express what is state pension

“Luckily, our costs are likely to be lower once we’re retired. Also, many of us these days are enrolled automatically into workplace pensions from the age of 22. You should check whether you are making most of your workplace pension, it’s free money from the employer adding to your pension, so it’s not something you want to miss out on!

“So, it’s not as bad as it could be, but will the money you accumulate this way be enough?

“The brutal fact is the state pension pays a lot less than the minimum wage. That’s not to say that it can’t add up to a significant sum when coupled with another income. But because we’re living longer, these additional pension savings need to stretch further.

“For most people, investing in funds that include a mix of shares and bonds attuned to their appetite for risk should provide a good balance. Of course, not all funds are created equal. Diversification is key – don’t put all your eggs in one basket!

“Also, fees can significantly reduce returns over long periods, so funds that replicate an index (so-called tracker or index funds) can be a cost-effective starting point for most investors.”

© GETTY millennial pension saving

Zoe Stabler, pensions specialist at personal finance comparison site finder.com also provided some top tips for millennials to help them boost their retirement funds.

She said: “Saving for a pension can be a daunting prospect. However, it’s never too early to start thinking about how to save or grow your pension pots. In fact, our research shows the average pension pot stands at just 18 percent of the recommended figure for a ‘comfortable’ retirement. This means a significant amount of the UK population could be saving more.

“Free personal finance apps such as Yolt and Money Dashboard enable you to track and maintain your budget easily. They have a range of features from budgeting tools, monitoring multiple accounts at once and real-time breakdowns of your spending, which allows you to monitor and understand your outgoings.

“When moving jobs, it is easy to forget the multiple pension funds lying around from previous schemes. Consolidating all your different pension pots into one scheme can remove the hassle of managing lots of different plans, give you a clearer idea of what you’ve got earmarked for retirement, could reduce fees and give you access to a wider range of investments. Ultimately, it could mean a higher pension income.

“However, the only thing to consider is whether there are any withdrawal penalties from your old schemes so make sure to double-check with your provider before deciding to consolidate your pots into one.”

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