Identifying this comprehension gap, urging Millennials understand the gravity of today’s decisions on tomorrow’s financial future, pensions experts, Profile Pensions, have researched average millennials spend and compared it to the government provided State Pension, revealing a concerning £1000 per month difference between the two monthly incomes.
Spending an average of £1770 a month, including living expenses, social activities and simple pleasures, the reasonable spend amount is still 142% more than what would receive if they only have the £731 State Pension to rely on.
With rent alone coming to 118% of the State Pension, even if millennials are to cut out all luxuries from their spend, such as Netflix, take away and nights out, the total spend of £1318 further raises the alarm bells that the State Pension is unsustainable.
Though, with the help of the Workplace Pensions Scheme and early intervention, little sacrifices can mean a world of difference for your future self.
The pension provider offers tips to both help slightly cut costs and take advantage of the scheme to maximise your benefit.
Take advantage of your company’s workplace pension scheme
Due to auto enrolment, you’ll be saving a minimum of 8% of your salary per month towards retirement. Comprised of a 5% deduction from your pay and a 3% employer contribution, the 3% employer contribution is money you will not otherwise receive that is added to your pension pot for your future self. The 5% you contribute provides added tax relief.
Be proactive and make sure your scheme is best for you
As with many things, the default option may not be what’s best for you. Looking at your pension plan now could make a considerable impact . Most workplace pensions
Cook for yourself, rather than take away
It’s a 101 saving tip but choosing to cook for yourself can be one of the easiest ways to cut costs. The average amount spent on groceries and takeaways together equals over £300 a month, by trading Deliveroo for Tesco, you could be putting aside as much as £110 a month towards your pension.
Enjoy nights out but be savvy about them
The average monthly amount spent on nights out is equal to 32% of the full state pension. While enjoying yourself while your young is important and this is an expense you’re likely to pay less in retirement, spending less while you’re out, considering cheaper options or just staying in a little more can cut costs in half and save you £100 a month to go towards your private pension pot.
The full study, including a full breakdown of expense, is available at Profile Pensions.