- Millennials spend a total of £1,770 a month, of which the State Pension covers less than half – only 41% of current monthly spend.
- A breakdown of average expenses reveals the generation pay more for rent alone (£773), than the entire monthly State Pension of £731.
- Pensions Advisor, Profile Pensions, claims a comfortable retirement requires access to £2371 per month, offering tips to Millennials on how to build towards this now.
If you’re just kick-starting your career, it can be hard to imagine yourself as a retiree relying on a pension pot. Taking into account everyday expenses, saving for your retirement while you’re still young can seem like less of a necessity, and more of an inconvenience – especially when you could be spending your hard-earned money on a night out or a well-deserved holiday. But does this mentality mean that millennials aren’t actually aware of the consequences they could face in the future without a sustainable pension pot?
Impartial pension experts, Profile Pensions, have analysed the monthly spending habits of millennials, from necessary living expenses to flat whites and takeaways, to help illustrate to millennials their financial state if they don’t start thinking about retirement now.
Break Down of Average Millennial Expenses:
- The Roof Over Your Head– Rent prices are well known as a
major millennial expense, but realising that the entirely monthly State Pension
is less than the average rent (£773) can drive home how vital additional
- The Little Things Add Up – Most millennials would be quick
to blame gym memberships when considering cutting costs but the research reveals
millennials spend more on daily coffees (£52 per month) than they do on gym
memberships (£40 per month.)
- ‘My Budget will Change When I’m Retired’ – Sure, Jägerbomb expenses are likely to go down during retirement, but will millennials stop loving Netflix? The research, even when only including essential living expenses, such as rent, bills, transport and groceries, totals £1,318. This amount is still £587 greater than what is provided on the State Pension – with not a streaming service in sight.
Top Saving Tips from the Experts:
- Take Advantage of Pension Schemes – All workplaces have to
offer a pension scheme, and committing to this means that a portion of your
salary (commonly 5%) is dedicated towards retirement for you. If you’re
proactive, check if the default scheme is really what’s right for you, as you
could be earning extra from a different scheme without any additional
- Cut Back On Big Nights – On average, the research found
millennials spend £211 on a night out – that’s 32% of the State Pension. While
still going out and enjoying ourselves, attempting to lower this amount even
just by half would mean we could put that extra £100 into a private pension.
- Eat More, Takeaway Less – Combining the average amount spent on groceries and takeaways equals £300 a month. Cooking for yourself can be healthier, tastier and save an extra £80 each month towards your pension.
Michelle Gribbin, Chief Investment Officer at Profile Pensions commented, “Although monthly expenses can vary from generation to generation, we wanted to showcase to those still climbing the career ladder the necessity of preparing for their financial future early, by highlighting just how much of their current lifestyles they would have to change in order to live comfortably in retirement. Although it can be easy to glance over small indulgences from time to time, it does all add up, and preparing for retirement is key for us all, no matter our age. In fact, as our results show, the earlier you can start saving, the more comfortable your retirement can be. ”
To uncover more about how a millennial lifestyle translates to a pensioner’s budget, and tips on how to ensure you’re prepared, find the full research here.