Young People May Need To Save 18% Of Salary
Young people in Britain may need to save 18% of their salary in order to have an “adequate” retirement, the International Longevity Centre-UK has suggested in a new report that is featured in The Financial Times (20/7/17).
The think-tank has concluded that young people entering the workforce today are facing a “monumental savings challenge.”
Indeed, a young person would have to save 20% of their salary, if they wanted to match the retirement income of today’s pensioners. Factors causing challenges to savers have been highlighted as low investment returns, slow wage growth, and the decline of benefit schemes.
The report adds that only 12.4% of people in the UK are saving more than 15% of their earnings for retirement, which means the majority of people are in a poor position to achieve adequate retirement income.
These findings reflect what we’ve found with our own Savings Gap research. Our latest report shows that an income of £23,000 is needed annually in retirement to live comfortably, but actual savings behavior shows that people in the UK are in course to receive a retirement income of just £6,000. The result is the Savings Gap, and we’ve made it our mission to close this through better financial education and easier to use financial products.
One of the ways we have done this, is through our impulseSave® technology. Over £80 million has been impulseSaved, with people able to top up anywhere, anytime. By setting goals and tracking their performance, our impulseSave® users are more likely to focus on their long term aspirations.
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