Peter Bradshaw, National Accounts Director at Selectapension, says there's an opportunity to be grasped
George Osborne’s recent decision to increase the state pension age to 70 may be met with concern by twenty-somethings in the workplace; and yet this is a key opportunity for financial advisers to help younger generations look to private pensions as a way of saving for an earlier retirement.
By analysing our system data, we have found that 25-34 year olds have the biggest capacity to increase their earning potential before retirement, compared to other age groups. In addition, from the age of 25, this generation can expect to more than double their salaries by the time they have reached 34 years old.
Nw, if we compare this group to the generation before them, those aged 34 can expect to increase their salaries by just 28% by the time they hit 50. As those in their twenties will now be working for longer than ever before, they will need to turn to financial advisers in order to plan for their retirement.
Up until now, this age group has been passed over by advisers because of their lack of engagement in financial services. But evidence now suggests they are increasingly taking more of an interest in their financial futures, and advisers urgently need to wise up to the potential within this age band. With a longer work-life ahead on them, this age group will need to give careful consideration to how they invest their earnings.
Furthermore, as the Government is currently looking to introduce all consumers to long-term savings with schemes such as auto-enrolment, advisers can expect younger savers to become more switched on to pensions. Clearly there is an opportunity for advisers to show how younger generations can save effectively for the future.
This generation is particularly significant for the adviser community because they are also one of the first age groups that will be paying directly for financial advice. Therefore technology, such as Selectapension, will play a crucial part in ensuring that younger generations are working towards suitable pension outcomes.
Advisers should be looking to build relationships now so they can be part of this generation’s journey to retirement.