One thing that came through loud and clear in our research is that pigeon-holing millennials into one group is not at all helpful. As a result, developing a single strategy is unlikely to have the desired impact. We have however identified five broad categories into which millennials fall:
Millennials living at home with their parents into their thirties because they cannot afford to live independently. Nearly half (49%) said that their income held them back from paying more into their pension.1
Younger millennials who are choosing to live at home so that every spare pound can go towards a house. They are most concerned with maintaining their lifestyle (38%)2 and not being able to afford a property (36%)3.
Millennials who live independently but struggle with household bills and have little spare cash to put towards a deposit. 2 in 5 (40%)4 say that they are kept awake at night worrying about paying the bills and over a third (36%)5 say that paying debts are key concerns keeping them awake at night. They have little or no spare cash for pension saving and over a quarter (26%)6 have no savings at all.
Older millennials in a financially strong position, on the housing ladder and able to save some money. Over two thirds (68%)7 have a pension.
As you can see, arguably the fourth group – Measured Homeowners – will need advice more than the other groups. In particular, mortgage and protection advice might be high on their agenda.
As many millennials will be members of their employer’s auto-enrolment scheme, developing a workplace advice service could be one way of tapping into this desire for advice.
Automatic enrolment into a workplace pension is also very popular with millennials, with nearly three quarters (71%)12 deciding not to opt out. There is also a high level of acceptance that they will have to pay for their retirement and not rely solely on the state pension.
Most (75%) millennials who have a pension say they would increase their pension payments automatically in line with a pay rise. 2 in 5 (40%)13 said that they plan to increase their monthly pension contributions next year, and half (50%)14 said that their pension was a high priority.
Coupled with low opt out rates and the realisation that they will ultimately have to be responsible for their own retirement, millennials could be saving more than expected.
By the time that they get to the point that they are building up a large pension pot, millennials will need advice. Especially perhaps as they start to think about retirement income.
There are positive signs that they understand the need to save more and want to be more engaged with their long-term savings. Bigger pension pots can only be good news for millennials and advisers alike.