Many younger people now rely on the bank of Mum and Dad to help get them on the housing ladder. But parents may also have some useful life lessons to impart when it comes to saving towards a more secure financial future.
Research among the over 50s found that half regretted not starting a pension earlier, while almost two-thirds said they wished they had saved more into their retirement funds.
Those embarking on careers today have the benefit of auto-enrolment pensions, with employer contributions, once they earn more than £10,000. Of the over 50s surveyed, 25% delayed starting a pension until they were in their 30s, often putting mortgage payments and family needs ahead of pension contributions.
However, financial experts warn that parents’ advice is not always correct when it comes to how much to contribute to a pension plan. A quarter of those aged over 50 think that putting 5% of earnings into a pension will be enough to fund a decent retirement – the current minimum auto-enrolment contribution. Experts disagree, stating that these minimum levels could leave people with insufficient funds in retirement. The Pension and Lifetime Savings Association believes that people should be savings around 12% of their earnings into a pension if they want a comfortable retirement.
Where possible, younger workers should look to increase pension savings beyond minimum levels and ensure their pension contributions increase with any salary rise. This should help protect against the same financial regrets when they reach their parents’ age.
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
Past performance is not a reliable indicator of future performance.
Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
The Financial Conduct Authority does not regulate auto enrolment.
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