While young Brits are at least saving some their monthly earnings, new research suggests they are still not putting aside enough for their future retirement.
A survey conducted by Birmingham Midshires, questioning 1,000 people, finds in the first three months of this year, young Brits under the age of 30 saved an average of £792.
While this represents a 14% increase in the past six months, the bank finds only £167 of this is being set aside for retirement purposes, representing a mere yearly sum of £668.
This runs parallel with research recently published by Scottish Widows on pensions and affordability, finding young British workers are only putting 9.3% of their income towards their retirement annually. The firm estimates a minimum of 12% is required to ensure a decent standard of living during retirement.
Moreover, BM finds more than half (53%), of respondents saved between January and March this year, at a national average of £226 a month.
From this total, as little as £58.53 is being put aside for retirement, with those people aged in their 50s, contributing £81 every three months, preferring instead to put money aside for DIY home improvements, according to BM.
Head of savings products at Birmingham Midshires, Richard Brown, says research shows Brits do save and regularly, opposing long-held beliefs from the industry.
Brown says: “It is more a question of attitude than affordability. Irrespective of people's salary level, most Brits are now regularly saving between 15-20% of their monthly take home pay.”
Pensions specialist Prudential provides an anticipated scenario facing a 30 year-old hoping to retire at 65, using future basic state pension, state second pension and future earnings growth.
Pru finds an additional monthly saving of around £340 is needed to achieve a pension of two-thirds of their annual pre-retirement income. If they defer retirement until age 70, an additional monthly saving of £150 is required in order to achieve the same result.
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