More than half (51 per cent) of under-40s are saving into a Cash ISA, but just 46 per cent have retirement savings, a new report has found.
According to recent research from Nottingham Building Society, although 90 per cent of under-40s are saving regularly, few are using their savings to fund private pensions.
Furthermore, almost one quarter of under-40s wrongly believe that the state pension will pay them £10,000 per year or more. Under current laws, the maximum amount that can be claimed by the state pension is £8,546 per year.
“With an aging population that sees people living longer, many will experience a retirement shortfall if they don’t pro-actively prepare whilst they are young and this generation will need to do more due to rising house prices and changes in state pensions,” said Tina Hayton Banks, director of member services at Nottingham Building Society.
“At The Nottingham, we are committed to supporting and rewarding members who plan for their financial futures and although retirement may seem a long way off, the earlier you start saving for retirement the better.”
According to the research, under-40s are putting an average of £370 per month into savings and investments. However, pension savers are saving an average of just £230 per month.
Among those under-40s who are not saving for retirement, 22 per cent said they wanted to pay off their debts first, while 20 per cent said they would rather spend their money.