30-somethings face tough future
Friday, 07 Mar 2008 11:39
Pensions: Young Brits running out of time to save
Many of today's 30-somethings will have to work into their 70s or start earning six-figure salaries to afford retirement.
A study by Skipton Building Society reveals people aged 35 or under – dubbed the 'TISWAS generation' – Thirty Somethings Without Any Savings – will have to start earning £283,162 a year if they want to retire at 64 with an income of £26,540.
Otherwise they will have to live on £304 a month or work until 74.
The poll of young people in Yorkshire revealed – one in seven spend more than they earn and 53 per cent contribute nothing to a pension.
Their biggest outgoing after rent or mortgage repayments is servicing debt – paying off past spending and not saving for the future.
As finances are stretched and debts average £8,477 – 21 per cent of those polled delay paying bills, and 17 per cent put off rent or mortgage repayments.
Strategies for climbing out of debt range from the lottery to turn to the bank of mum and dad.
Those who can afford to save put aside £125 a month, and 16 per cent have over £10,000 saved.
Jennifer Holloway, head of media relations at Skipton, said: "It's definitely time for a wake up call - especially when our figures show today's under 35s will either need to work much, much longer or earn much, much more to be able to retire when and how they want to.
"However, the good news is that those who have taken a more serious look at their money (perhaps viewers of the more sedate Swap Shop) are doing well, with one in seven savers having more than £10,000.
"And even though it may seem daunting, it could be easy for those in the red to join those in the black. The first step is to work out exactly how much money is coming in and going out each month."
She explained the next step was to make a few sacrifices – such as going out less or buying fewer CDS – and opening a regular savings account.
"By setting up a standing order so the cash is transferred from your bank account as soon as you're paid, you won't even notice it's gone," Ms Holloway said.
"And for those who might be tempted to dip into their savings for the odd spending spree, an account with limited access would be a good choice."