Millennials, those currently aged between 25 and 34, expect to fully retire at 62 and four in ten want to semi-retire at 57, according to a survey by BlackRock. On top of that they are underestimating their life expectancy by more than ten years which means they are miscalculating the pot they need for their retirement by £373,000.
BlackRock’s Joe Parkin says ‘the millennial age group have trouble grasping how many years lie ahead of them, and how many years they need to save for.’
One in five millennials will live to see their 100th birthday and yet they predict they will only live until they are 79. That could lead to a significant retirement shortfall.
In terms of income during retirement they claim they will need £27,000 annually and believe a pot of £167,000 will get them there. In fact, to last them throughout retirement they’ll need a pot of £540,000.
Parkin says that ‘another obstacle to making better financial decisions is the way that millennials separate different financial goals.’
When asked how they felt about saving, millennials said: responsible (48%), purposeful (36%) and relaxed (29%), all very positive emotions. However, when asked the same question about investing, they said they felt: cautious (38%), worried (28%) and anxious (27%).
They have more than two-thirds of their savings, outside a pension, sitting in cash (68%), but see their ideal amount is half of that (38%).
Millennials also draw a distinct line between saving and investing.
But, Parkin says it’s not all doom and gloom as 59% of millennials do take financial planning seriously and a quarter of them currently use a professional financial adviser, more than any other age group.