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Simoney Kyriakou

Content plus editor, FTAdviser

Millennials have to work longer and save harder if they are to have a financially secure retirement, Simoney Kyriakou reports.

Millennials have it so good in many ways: better healthcare, technological advancements, greater social awareness and unicorn lattes.

But when it comes down to finances, those born between 1980 and 2010 are fast becoming a disenfranchised generation.

They are likely to have lower wage growth, higher debt burdens, less chance of getting onto the property ladder before they are 40, and will probably have to work late into their 70s before they have any certainty they won’t be impoverished in later life.

This might sound like hyperbole, but the warnings come from many studies. For example, earlier this year, LV= produced an Income Roulette study, which revealed the late-millennial generation (those aged between 25 and 34) are one of the least financially resilient groups in the UK.

Based on research conducted with over 9,000 people, the study found 55 per cent of this group fell far short of the Money Advice Service’s recommended amount of savings to be financially resilient.

“People need to understand they need to review their savings regularly to make sure they remain on track”
– Jamie Clark, Royal London

According to the service, resilience can be defined as someone who has 90 days’ worth of outgoings in savings; the LV= study found 34 per cent of late-millennials could only survive for one month or less if they lost their income.

Long-term planning

The situation for pensions saving is even worse. In October, the Pensions and Lifetime Savings Association warned 13.6 million UK workers were at a “high risk” of “failing to achieve an adequate level of income in retirement”.

The organisation therefore proposed a national retirement income target to be set to help people start saving more, earlier on in their careers.

Jamie Clark, business development manager at Royal London intermediary pensions, believes a national retirement income target is a sensible suggestion.

He explains: “If it forms part of a strategy that helps and encourages people to engage with their savings, then it can only be a good thing.”


The financial problem facing millennials when they approach retirement is compounded by a lack of engagement, as Mark Grimes, product director at EValue, has warned.

He says: “A lack of millennial engagement in pensions could be catastrophic. While millennials have time on their side, they need to take advantage of the tools at their disposal to help them map out savings goals and provide for their desired retirement lifestyle.”

Taking advice can help, according to Mr Clark, who says: “In particular, people need to understand they need to review their savings regularly to make sure they remain on track and that their desired level of retirement income when they take their benefits will be sustainable.”

For many, this might mean taking steps towards getting independent financial advice. He adds: “Financial advisers will normally provide these services to their clients and taking impartial financial advice has been shown to help people achieve good outcomes.”

Working hard, saving harder

What does this mean in practical terms? Neil Adams, head of pension planning for advisory firm Drewberry, comments: “For millennials, improving their financial prospects comes down to working hard and saving even harder.

“They should also manage their expectations. 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 grandparents’ generation enjoy.”

He points out the “simple fact is millennials will have to work at least 10 years longer than their baby-boomer ancestors and are likely to be far less well-off than them when they do eventually get to retire”.

It also means millennials should do more to take advantage of developments in fintech to help keep their own financial health in gear.

Mr Grimes says it is also up to the industry to make sure these tools are available. He says: “The financial services industry must take advantage of the developments in robo-advice and AI to make financial planning, and advice, much more accessible for millennials.

“They’re never likely to achieve the same level of wealth they’ve seen their grandparents’ generation enjoy”
– Neil Adams, Drewberry

“Providing easy to use tools and jargon free information will ensure that everyone is aware of their options, allowing consumers to look beyond Isas to more sustainable long-term savings such as pensions.

“Through the creation of day-to-day engagement tools for consumers, personal financial management will become second nature and employers could see much higher levels of pension engagement from staff, including millennials.”


While medical advances and improving longevity suggests today’s youth will live longer and be potentially healthier in their twilight season, they will have to manage longer with less.

But there is one silver – or golden – lining for millennials, as Mr Adams points out: “The one upside for the average millennial is that they stand to inherit more wealth than any generation before them, much of it in the form of inherited pension wealth.”

Simoney Kyriakou is content plus editor for FTAdviser

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