We often make the mistake of presuming that only those nearing retirement really think about their pension pot. However, new research from PensionBee has found that it’s actually the younger generation that is more clued in to their pensions. In fact, Gen Z pensions appear on track to be larger than those of Millennials or Gen X.
So, what has caused this? And what changes can those nearing retirement make?
Are Gen Z pension savers more clued up?
PensionBee’s survey of 2,000 UK citizens found that only 23% of Gen Z savers (18 to 23-year-olds) don’t know how much they have saved for retirement. In stark contrast, 34% of Gen X savers (41-54-years-olds) admit the same.
More worryingly, 14% of Millennials (24 to 40 years old) and 14% of Gen X savers say they have no pension savings whatsoever. However, if we take a look at Gen Z, only 3% say they haven’t started saving for retirement.
So why the big difference? Well, the key change when it comes to Gen Z pensions is that they have benefited from the auto-enrolment scheme. As a result, employers are now required to contribute towards a workplace pension for eligible staff. So Gen Z has got a head start.
Also, there has been a lack of transparency and engagement around pensions for older generations. This has left them worrying about having enough to live on comfortably. The stats show that 16% of Gen X and 12% of Millennials are worried about their pension pots, compared to just 5% of Gen Z savers.
How can you plan better for your retirement?
Whether you are a Gen X, Millennial or Gen Z saver, it’s never too late to start thinking about your pension pot.
Here are a few steps you can take to better understand your pension situation:
- Calculate your current pension pot. You may have several workplace or private pensions hanging around and you don’t know how much is in each one. To better plan for retirement, it’s a useful exercise to look at the balance of each one. That way, you know what you already have, and that can better inform what you still need to save.
- Work out how much you need. How much you can save towards your pension will depend on your circumstances and lifestyle. Try to work out how much you can afford to save, how long you have to save and what you want your income to be when you retire.
- Check your State Pension entitlement. While the State Pension is not really enough to retire on, it helps to know how much you are entitled to receive.
- Consider setting up a private pension. If you are concerned that your retirement savings could fall short, then you could set up your own pension account to save into. Having an extra pension to top up could help bolster your retirement savings. Providers such as Nutmeg, Wealthsimple and even PensionBee make it easy to do, with everything handled online.
