The Importance of Saving for Millenials

15 September 2019

The Importance of Saving for Millenials

Why bother saving? Buying a house seems difficult enough never mind thinking about the distant dream of being able to retire.

As a Chartered Financial Planner in my mid-20’s, I’m somewhat well positioned to understand the conflicting priorities faced by millennials or ‘generation rent’, coupled with a knowledge of the importance of retirement planning.

The death of final salary pensions for my generation has seen the responsibility of saving for retirement shift from the employer to the employee. With the ever-increasing state pension age (will we even get one?!), there has never been a more important time to save for and take control of your own retirement.

According to a World Economic Forum report, the estimated savings gap in the UK in 2050 will grow to $33tn from £8tn in 2015, an annual growth rate of 4%. 

The foundation of any good savings plan is ensuring that you have a cash buffer for any unplanned expenses, so as to avoid getting into high-interest debt on credit cards or payday loans which can cripple your ability to save money. Typically this will be between 3-6 months of expenditure in an instant access cash account.

For most people, the next priority should be ensuring that your income is protected in the event that you cannot work through accident or illness. If you have no income then you can’t possibly save any of it!

The key to a successful retirement from here is understanding what your outgoings will be once you finish working, at what age you plan to retire and what level of savings you, therefore, need to put away to make that provision. 

According to a recent survey women need to be especially vigilant; Eleanor Levy, from Now Pensions who are sponsoring the Pensions Awareness Day campaign this year, said that their research reveals that women retire with pension pots a third of the size of men’s. On average that is £100,000 less than men in their pension pot, which shows how it is particularly important for young women to start saving as early as possible and contribute more to their retirement savings. 

Saving from a young age requires discipline and is not easy. Being in my 20’s myself and seeing people living lavish lifestyles on social media and all the advertising that we are bombarded with across every platform can be overwhelming. This, alongside the ease of paying for things through contactless or Apple pay, ensures serious willpower is required to save.

You have to make peace with yourself and be realistic about what you can afford. Set budgets for things that are important to you like travel, the arts, cars or sports but make sure you also set a budget for saving some money on a regular basis and understand how much that is likely to get you in retirement. 

This is where the Lifetime ISA is a great tool for younger people to be able to save for a house deposit or a retirement fund with a generous government bonus of 25% on up to £4,000 each tax year.

Albert Einstein famously described compound interest as the “eighth wonder of the world” and when it comes to saving for retirement, taking advantage of this ‘wonder’ is critical. 

If you run through the figures, the amount you need to save to provide an annual income of £25,000 can be quite shocking! This is where compound growth is your friend. As demonstrated by research published in the Telegraph, someone who starts saving at the age of 21 and then stops at 30 will end up with a bigger pension pot than a saver who starts at 30 and puts money aside for the next 40 years until retiring at 70.

This is why I don’t recommend using all of your savings in your younger years to get on the property ladder - a retirement fund is equally as important.

To provide guidance for those who are interested, I have provided a practical list of do’s and don’ts in achieving your dream retirement:

Do’s 

• Set aside an emergency fund

• Protect your income

• Check out where your pensions are invested, the level of charges and the performance history

• Speak to your employer about any contribution matching available

• Request a state pension forecast to check your entitlement 

• Set monthly budgets

• Take financial advice if you are unsure about the decisions you are making

Don’ts

• Get yourself into credit card debt

• Assume that you will be fine in retirement without taking action

• Compare your day to day life to others highlight reels on social media

• Spend money on things you don’t need now, rather than saving for the future 

• Use all of your savings for a house deposit

• Rely on an inheritance

• Wait until it is too late!

To keep on the right track, review your pension/ISA funds at least annually and keep your monthly budgets up to date. Consult with a financial advisor where possible to advise you on any areas you are not sure of.

The Importance of Saving for Millenials

Important note

No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.

Walker Crips Investment Management Limited (WCIM) is a member of the London Stock Exchange and is Authorised and Regulated by the Financial Conduct Authority (FCA).

This website is solely for information and private circulation and does not constitute an offer to buy or sell shares in any company mentioned herein. References to Walker Crips refer to Walker Crips Investment Management Limited and/or other companies within Walker Crips Group plc. It is important to remember that the value of investments and the income from them can go down as well as up and investors may not realise the value of the initial investment. Recommendations may or may not be suitable for all recipients of this publication and if you have any doubts you should seek advice from your investment advisor. WCIM cannot accept responsibility for any losses which may be incurred by anyone acting on such recommendations. The value in sterling terms of foreign investments may rise or fall in response to currency fluctuations.

It must be noted that information concerning past performance is not a guide to future performance. In line with the FCA rules on conflicts of interest, investors should be aware that Walker Crips may have actual or potential conflicts of interest that could affect the objectivity and independence of their research. Where such conflicts exist it is Walker Crips’ policy to disclose them publicly. Principals and Associates of WCIM may have held a long term position in some of the stocks or shares mentioned herein. Consequently, in line with FCA Rules on conflicts of interest, WCIM research in these areas cannot be classified as impartial within the FCA’s definition and should not be relied upon as independent or objective. Prices and factual details are deemed to be correct at the time of publication but may change subsequently. The publication has been prepared with all reasonable care and is not knowingly misleading in whole or in part. Expressions of opinion are subject to change without notice.

Investors are strongly advised to consult with their own Broker / Account Executive to discuss risk levels and whether a particular investment is suitable for their financial circumstances.

Opinions expressed by individuals within this website does not necessarily represent the views of the Company.

Please indicate that you agree with the statement below to continue

If you do not agree with the above statement and have questions about our service and products please contact us on 020 3100 8000.

Display disclaimer

Investors should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, may fall as well as rise and the amount realised may be less than the original sum invested.


Walker Crips Group plc (Old Change House, 128 Queen Victoria Street, London EC4V 4BJ), registered in England, registered number 1432059, incorporates the following companies which are authorised and regulated by the Financial Conduct Authority: Walker Crips Investment Management Limited registered in England number 4774117 member of the London Stock Exchange, Walker Crips Wealth Management Limited registered in England number 3790291, Ebor Trustees Limited registered in England number 3514268, Barker Poland Asset Management LLP registered in England and Wales number OC341149.