Dan Brent, Consultant at Thomas Miller Investment, comments on the financial issues facing Millennials
Amongst the abundance of accusations levelled at the younger generation, if a Millennial or Generation Y-er, one which must surely rankle with them is that they simply have no regard for their financial independence and pay scant attention to their future retirement.
If the popular narrative is to be believed, those aged 18 – 34 are clueless about their finances, and more inclined to spend their salary on a macchiato from Starbucks rather than saving into a pension or ISA. Indeed, they are more likely to head out to a full moon party in Thailand than join their employer’s SAYE scheme.
It is true that with increasing longevity, the death of final salary pension schemes and questions around whether the state pension will be in existence in 35 years’ time, building up sufficient savings for retirement is now more important than ever but can this even be achieved anymore?
The younger generation is paid less, has higher living costs and the economic future looks decidedly bleaker now than it did for their parents. Buying a house is out of the question for many, with the gap between the average wage and the average house price becoming unsurmountable without the help of the bank of mum and dad.
Young people have not made a decision to abstain from saving. If houses were affordable, retirement a genuine prospect and financial stability an attainable target, they would save and invest and prepare for retirement as well as any generation before.
There are things that need be done. Pensions can be modernised and made accessible to younger savers by making them more interactive. Employers need to proactively entice younger employees to save into the company pension by offering matching contributions in line with older employees. Younger advisers need to be recruited or promoted from within as they are more likely to have links with people of their own age.
If we are to interest this disadvantaged generation in retirement saving, this too needs to be available at the swipe of a screen: left or right.