Millennials need to save for later in life or face relative poverty in retirement

PUBLISHED: 10:41 25 January 2018 | UPDATED: 10:52 25 January 2018

It's time to get saving. Photo: Getty Images/iStockphoto

It's time to get saving. Photo: Getty Images/iStockphoto


Early morning locker room banter can be very funny – and a little too ripe to repeat here, though frankly, I look forward to the mix of “did you hear the one about the bloke who goes into a bar with his giraffe…”, or listening to the opinions on last night’s match, all rather more forthright than you ever hear on TV.

Peter SharkeyPeter Sharkey

This has nothing to do with a need to satisfy an uncontrollable urge to hear iffy jokes or consider the collective judgement on an overpaid centre forward deemed ‘tired’ after playing football three times in a week, however. It’s just that I go swimming for an hour each morning, after which I dive in the sauna for ten minutes before showering and getting dressed, a well-established routine which ensures I’m at my desk by 9.15am.

A recent influx of new faces reminds me that we’ve reached that time of the year when the new year ‘resolutionists’ arrive en masse, each convinced that the best way to satisfy resolutions made a couple of weeks ago is to start visiting the pool while it’s still dark.

Few could argue with such ambition; I just hope they understand that the best way to remain healthy and lose excess pounds is to start modestly and gradually build the number of lengths or time spent in the pool.

Every January, we witness the unannounced arrival of around 20 new guys, most prepared to smirk respectfully at our jokes, but by early March fewer than 20% of the new faces are still there, a percentage that tumbles further by the end of May.

This column is brought to you in association with Almary Green. Photo: Almary GreenThis column is brought to you in association with Almary Green. Photo: Almary Green

What happens to the enthusiastic January surge? Getting up at 6.15 probably doesn’t help. But January is a good month to start a hobby, satisfy an ambition, learn a musical instrument or, as one family member has done, sign up for acting classes and there’s no reason why our finances cannot benefit from similar levels of endorphin-primed attitudes towards realistic achievement.

However, before waxing lyrical about how you should ‘clean up your finances’, an over-used and ultimately meaningless headline, let me instead provide those hovering by the side of the figurative pool some motivation. It is particularly appropriate if you’re part of the much-maligned millennial generation.

A report into state pensions in last Wednesday’s Financial Times prompted Caroline Abrahams, a director of Age UK, to highlight how meagre they are.

“Many people are surprised to learn that the average state pension is only just over £7,000 per year,” said Ms Abrahams. This, she explained, is “less than half the annual salary of a full-time working adult on the minimum wage of £7.50 an hour.” Nevertheless, Ms Abrahams concluded, the “state pension is still the main source of income for millions of older people.”

The FT feature rammed this message home: the standard of living people hoped to have in their later years is nowhere near what they expected and this, said the newspaper, gets worse as their savings dwindle.

The message for Britain’s younger generation, ie those under 45, is clear: put money aside during your working years to create a supplementary income or face relative poverty in retirement.

Couldn’t happen to you? It could. The reasons are severalfold, but the most obvious one is this: by the time a 35-year-old reaches the official retirement age – that’s likely to be at least 40 years away – there won’t be any money left in the Treasury’s kitty with which to pay pensions to everyone. Pensions will be means-tested and only the very poorest 10% will receive something.

“What about National Insurance Contributions,” you exclaim. Well, what about them? They’re an income tax, not some ring-fenced investment fund designed to disburse pensions. As this column has reminded readers before: the UK’s state pension system is a giant Ponzi scheme and as we shall soon reach the point where there is less being contributed in NIC than paid out in pensions, so the system will become unsustainable.

However you’re getting on with your other new year resolutions, do yourself a massive favour by starting to put modest sums of money aside, into an ISA perhaps, or increase the amount you’re already saving. You may have to sacrifice something in return, but the sooner you take the proverbial plunge, the fitter your finances will become.

The Week in Numbers

£30 million

The annual cost saving Marks & Spencer expects to make after signing a ‘technology transformation’ plan with Indian company Tata Consulting. The move is part of M&S’s £1 billion investment in technology designed to modernise logistics and improve its online shopping experience.

4 million

Total number of subscribers attracted to Amazon’s streaming service by the end of September, according to the broadcasting data authority. The figure, though impressive, suggests a slow-down in the number of new subscribers.


Average selling price of homes sold by Persimmon, the FTSE100 housebuilder, in 2017, an increase of 3% on 2016. Persimmon sold 16,000 houses last year.


Number of pole-dancing robots built by Giles Walker, a British artist, replete with frilly garter and high heels, on show at a ‘gentleman’s club’ in Las Vegas while the Consumer Electronics Show is staged in Sin City.


Number of vehicles with diesel engines sold by Jaguar Land Rover in the UK last year. Sales of new diesels are expected to fall by around 10% this year.


Supermarket giant Morrisons will start supplying 1,650 McColl’s shops with tobacco products later this month after wholesaler and previous supplier Palmer & Harvey went into liquidation.

Peter Sharkey read economics at the University of Bristol. He worked as an accountant on three continents and has been a company director and investor for more than 30 years, building and selling three different companies.

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