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Great (pension) expectations you’d need £1.9m to meet

Could you save £1.9 million between now and retirement? The answer for most of us would be a resounding ‘no’. But this is the amount 16-24 year olds would need to save to meet their retirement expectations of £64,000 a year, according to insurance company Aegon. 

The research also states young adults are the most unrealistic when it comes to their pension goals.

To achieve a pension pot that would fund a yearly income of £64,000, a person aged 20, who was aiming to retire at age 68, the expected state pension age, would need to save £500 a month according to Aegon, assuming a 5% return on their investments.

However, with 16 to 24 year olds hoping to retire at 63, they would have to put away even more, saving £800 a month.

Reality is slightly different from this, however, with over half (59%) of this age group contributing no money to their pension pot at all.

Start thinking about your pension early

Of course, saving £800 a month when you are aged between 16-24 is slightly unrealistic.

But that doesn’t mean this age group shouldn’t start thinking about their retirement. It doesn’t have to take very long.

Seven in 10 (70%) of this age group have never done anything to review or begin plans for retirement, while over half (54%) don’t know whether they are eligible to be enrolled into a workplace pension.

This is a vital, and simple, way to prepare for retirement.  If you are employed, talk to your employer about their workplace pension scheme. There is a minimum total amount that has to be contributed by you, your employer, and the government in the form of tax relief. You don’t have to put in very much to start to build up a pot.

Employers now have to enrol you in a workplace pension scheme if you aren’t in one already, and are at least 22 years old with a salary of more than £10,000 a year. This auto-enrolment will apply to all employers by 2018, but it doesn’t stop you checking and joining yours now, even if your employer isn’t part of auto-enrolment yet.

Take the time to read up about pensions, whatever your age, and you could find this makes a real difference to your retirement income, whether retirement is 5 years away or 45.

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  • Christie Paala / 3 September 2015

    I'm 51y/o in two months time. Do I'm allowed to have the private pension?
    Help please! Thanks