How today’s millennials are saving (or not) for retirement

Stretched by high living costs and student debt, how are young adults building their pension pots? Laura Suter finds out

Rising housing costs, soaring student debt and low wage inflation have left millennials with stretched budgets. So how is the generation that came of age with the internet era starting to save for the future?

Research this week from the Resolution Foundation found that a third of all millennials could still be renting property when they come to claim their pension, thanks to high property prices in the UK.

By contrast, a large proportion of today’s pensioners live in unmortgaged properties, reducing their outgoings.

The cost of rent will put a further strain on pension income, requiring millennials to have larger pots set aside for retirement.

However, the days of “gold-plated” pension schemes, also known as “defined benefit”, are as good as over, putting the onus on individuals to save more themselves for their retirement – rather than relying on their employer.

The Government’s new autoenrolment initiative aims to help this. It requires companies to have a staff pension scheme and stipulates the contributions that employees and employers must make each month.

This month the minimum contribution increased to 3pc for employees and 2pc for employers. Staff can “opt out” of the pension and make no contributions. So far, few have chosen to do so, but there are concerns that more will opt out as the minimum contributions increase – ultimately reaching 5pc for employees and 3pc for employers.

According to wealth adviser Tilney, millennials are aware of the need to save for retirement; 46pc believe you should start saving for a pension in your 20s.

Yet half said that they couldn’t afford to put money in their pension as they’re saving for a house deposit or have no spare money after paying rent, student loan debt and other bills.

Telegraph Money asked three millennials how they are approaching their retirement savings. Emily Lucioni, 28, had her first child just one month ago, but it has already prompted her to think more about retirement and saving for the future.

Ms Lucioni said that previously she was focused on putting money aside for a house deposit and then her wedding 18 months ago, meaning that pension savings took a back seat.

Despite contributing 3pc of her salary to her work pension, Ms Lucioni, who works in client relations for a finance company, said that she knew she needed to save more to get the retirement she wanted.

“My parents don’t have an amazing pension and they encouraged me to be in a better position than they are,” she said. “I now contribute £80 each month through a self-invested personal pension. I save my contribution into a ready-made portfolio and then with tax relief I get from the Government I have a bit of a gamble myself.”

Ms Lucioni plans to carry on saving into her pension while she is still on full pay during maternity leave. She said she was initially worried about falling out of the habit when money becomes tighter after she moves to statutory maternity pay.

“My husband has now said that he will continue the contributions each month, as my retirement is important to him as well, and we don’t want to miss out on those payments,” she said.

“We know that we want to go

‘I want to retire in my 50s, but I have a lot of shortterm debt’