The UK is suffering a Pensions crisis. We’ve known about it for years and are constantly warned about it by Government and Financial Services. Estimates suggest a growing pension gap of some £27 billion per year. As Charlotte Black, marketing director at Brewin Dolphin says, “Many…are not taking any action to address the problem and are sleepwalking into disaster.�
And it’s not as if Generation X/Millennials are unaware of the financial chasm most of us face. In a survey of 18-24 year olds, 8 out of 10 are concerned about the amount of money they will have to live on after retirement and believe the pension payout will be lower than they need to live on.
But is it that Generation X are just lazy and too focused on ‘living for the moment’ to do anything about it? That seems to be the received wisdom these days. However, an interesting survey carried out by the Prudential seems to challenge that view (click here to see the survey)…
It would seem that 3.5 million British adults are already providing financial support for their retired parents! The average adult-child in Britain hands over £1,554 a year in support to their retired parents. That totals to a staggering £5.4 billion! The Prudential estimate that, if parents live an average of 20 years after retirement, each adult-child could pay as much as £30,000 towards financial support.
Ms Ronson from the Pru comments, “The growing need for parental subsidy presents real challenges for people of all generations. There is a danger that we will fall into a cycle in which each generation damages their own prospects of financial security to support the one before.”
So is it true that Generation X are not concerned enough to provide for pensions? Absolutely not! They are already providing for retirement support – just not their own! Here is a vital piece of information to add into the mix of generational research. First, there does seem to be a very real sense of responsibility amongst Generation X for the well-being of their families. Indeed, it is a priority for them. Second, the implication for the future is that, because Generation X have sacrificed so much to support their parents, they will need to work much longer in life to look after themselves.
To me, the issue here is one of perception. We have known for a long time about the UK Pension Gap. We have known that Gen X is not investing in Pension Funds. We have known that the retirement age is likely to increase. However, the media image is of a generation that doesn’t care enough to think beyond Today. It would seem that the exact opposite is true. Maybe Gen X is the most sacrificial and caring Generation of them all…
All Respect for Generation X
Newsweek had an excellent article recently where it stated that in some rural areas in Europe, the wild is actually busy encroaching on abandoned farmlands, creeping up on deserted villages and wild pack wolves are again roaming free even in central Europe. Young people just don’t seem to want the rural kind of life – they move to the cities in search of activity and opportunity.
I agree with the more “positive” outlook towards the retirement/pension problem. I am sure the economy and society (thus, today’s younger generations who will be in the uppper-authority positions in a few years time) will find ways to restore an accepted balance. People will probably work longer due to better healthcare yes. They may also WANT to work longer because of a change in mindset when you look at today’s over-active, over energetic and very curious younger generations. Excessive farm subsidies paid to farmers to NOT work will hopefully find better investment options (pension funds perhaps?) A constant increase in the economic standard of living might act as incentive to support older generations. An optimistic outlook, but hopefully a realistic one.