Millennials are prioritising saving for a mortgage over their pensions, risking the outcome of a lower income in retirement, new research from Prudential suggests.
Over a third (35%) of under 35s say they are saving for a deposit on a home instead of their retirement, according to the pension provider.
Nearly a fifth (19%) say buying a house is the main reason they don’t save more into their pension while one in 10 (10%) say student debt stops them saving into a pension.
Only one in 11 (9%) admits that frequently changing jobs affects their ability to make regular pension contributions.
The research found that in order to buy a home, millennials are also willing to make other sacrifices, with one in ten (10%) living with parents instead of renting to help save more money.
It also found that many young people are still having to rely of the Bank of Mum and Dad to buy a property, with 20% expecting to receive help from their parents.
While many young people are worried about graduate debt and the squeeze on wages, nearly a third (31%) still expect to buy their first property by the age of 30.
However, 17% of under-35s say buying a house is a not a realistic option currently, while one in seven 35-54-year olds have also given up on the hope of ever owning a home completely.
Kirsty Anderson, retirement income expert at Prudential, says: “Juggling buying a house with saving for retirement is challenging and it is inevitable that something gets dropped which unfortunately appears to be retirement saving.”
“Retirement can seem daunting for millennials and is of course a long way off when you are contending with student debts and high rents.
“However, it is crucial to start saving for your pension as early on as possible, putting away as much as you can each time. It is easier if you start doing this as soon as you start working so you get used to the money going straight into your pension pot.
"Many will at least be saving through the workplace, which is a good start, and contributions should be regularly reviewed to ensure a significant fund can be built up.”
While retirement can feel a long way off, starting to save early can have real advantages. First of all, money saved into a pension benefits from pension tax relief. This means that for every £80 you put in a pension, the government tops up with an additional £20. Higher rate and additional rate taxpayers get an even greater bonus from the government. Employers are also obliged to chip in for the retirement savings of their workers - often contributing in line with the amount saved by employees. Due to compounding, the longer pension pots have time to grow, the bigger they will be when they are needed.