The cost-of-living crisis may also be limiting the amount that people are able to put aside, as the research found that half of 18-34 year olds have stopped or reduced their regular savings amid rising prices
Nearly a third (32 per cent) of 18–34-year-olds know that they should be saving more for their retirement, with only 16 per cent believing that their savings are on track for a comfortable retirement, research from Wealth at Work has found.
In addition to this, more than a fifth (21 per cent) of young savers have no idea how much their pension is worth and almost a quarter (24 per cent) have no idea how much they will need to have saved for a comfortable retirement.
While auto-enrolment means that many workers are already paying 5 per cent of their salary into their workplace pension, alongside an employer contribution of 3 per cent, the survey showed that only a quarter of young people know that they can save more than their default contribution rate.
The cost-of-living crisis may also be limiting the amount that people are able to put aside, as the research found that half (50 per cent) of 18-34 year olds have stopped or reduced their regular savings amid rising prices.
Commenting on the findings, Wealth at Work director, Jonathan Watts-Lay, said that ‘it is very concerning’ that young people are having to reduce or completely stop their saving in an attempt to free up money to pay for ‘ever increasing bills’.
He stated: Whilst it is completely understandable, it is also important to recognise that stopping saving now could have a dramatic impact on their future, and something they regret later in life. It is important to still save what they can.
Saving may not be something many employees are thinking about in their 20s, it is really important that they understand the difference that saving more early on can make, compared to starting in their 30s or 40s, especially if their employer will match extra pension contributions, he said.
Before cutting back on any savings, employees should check all their outgoings to find other ways to save money e.g. cancelling any unused subscriptions or memberships, shopping around for better deals on TV, broadband and mobile suppliers, and switching brands on their regular shop, he said.
He said: It also may be better for an employee to reduce how much they save to what they can still afford rather than stopping it completely. Saving money is a habit, and once it is stopped, it is very difficult to start up again.