How much money should you put aside each month to provide a good income in the future? With a growing population and uncertain economic conditions, we ask are millennials saving enough?
There is no magic figure as needs and aspirations differ from one person to the next. However, with savings in place, most people will enjoy greater peace of mind.
Savings are usually associated with future plans. However, it’s important to emphasise that having a contingency fund is also important. That is true for young and old alike.
So many unexpected events occur in life, and having the financial resources to respond effectively removes many of life’s worries.
Confident young savers
A recent study by Schroders (Global Investor Study 2019 HERE) revealed that young people are confident about their future. In fact, 38% of millennials (those aged between 18 and 37) believe that they are already saving enough.
The study was extensive, involving 25,000 investors from around the world.
The confidence of the younger generation contrasts with savers and investors in older age brackets.
Only 29% of Generation X (aged 38 to 50) thought they saved enough. The figure was even lower (21%) for Baby Boomers (aged 51 to 70).
A changing financial landscape
Because house prices have risen quickly in recent decades and wage growth has slowed many have assumed that millennials would struggle to save.
The reality is very different. The Schroders research showed that young investors were saving an impressive 15.9% of their earnings. That is more than their older counterparts and more than the 15% recommended by the investment industry.
However, there are many uncertainties that could affect millennials during retirement.
The ageing population will put increased pressure on economies. The state pension age has already been put back and could be altered further in the years ahead.
Careers and incomes can also fluctuate. If salaries drop and the cost of borrowing increases millennials could be squeezed.
While the data currently shows 18 to 37-year-olds building healthy savings funds they should not be complacent.
Independent advice about savings
One thing millennials have on their side is time. They can plan, adapt and change savings behaviour if required as they reach their 40s, 50s and 60s.
Logic Wealth Planning always takes a rounded view of investments and wealth planning. We determinate what people’s longer-term aims are. Then we help people map out the best route to achieving their goals.
Crucially, we work closely with clients to review plans and make changes when necessary.
Please be aware the value of investments or income from them can fall as well as rise.
Call us on 0808 1234 321 or email email@example.com to arrange a no-obligation chat about savings and investment – whatever your age.
It’s never too late to start thinking about the future, but the earlier you start saving the better.