Almost six in 10 (59 per cent) UK Millennials are struggling to save for retirement due to their current life stage, compared to 48 per cent of Gen Z and 39 per cent of Gen X, research from Phoenix Group has found.

The survey also revealed that a quarter (25 per cent) of Millennials felt that income change was the main reason they struggle to save for retirement, while 24 per cent said they struggled due to childcare responsibilities.

In particular, Millennials were twice as likely than any other age cohort to cite childcare as a reason for not saving for retirement.

Phoenix Group observed that the life events Millennials face can have a huge disruption on their ability to save, including parental leave, childcare commitments, becoming a homeowner, and career break or change.

Additionally, research from the Office of National Statistics pointed out that women are disproportionally impacted at this stage of their lives as they are more likely to take on childcare and caring responsibilities.

Phoenix Group's research also suggested how finances are prioritised among Millennials during a ‘saving squeeze’, as 20 per cent said paying into their pension was a priority, with short-term financial goals being seen as more important.

For some, financial pressures had led to some savers decreasing (7 per cent) or stopping (7 per cent) their pension contributions in the past year.

In addition to this, previous research from Phoenix Insights found that the amount of men and women who save in their pension starts to diverge from 25-34 years old and continues to grow until men are saving 50 per cent more a month than women by ages 45-54.  

Commenting on the research, Phoenix Insights head of research analysis and policy, Patrick Thomson, said: “The stereotype of the spendthrift generation is all too familiar when it comes to Millennial finances, but the reality is far removed from the ‘avocado on toast’ tag placed on them.

"As a Millennial myself, I know first-hand the pressures many at this stage face weighing up competing priorities that pull us in different directions.

“This can lead to day-to-day essentials, such as housing or childcare costs, being prioritised over longer-term savings goals.

“The research finds some millennials have decreased or stopped pension contributions entirely but the numbers doing this remains low, underlining the benefits of people being opted-in to pension saving as default.”

However, Thomson explained there was a risk that, if people do not readjust their savings once they have gotten through a short-term financial challenge, they will retire with much less than they had hoped.
 
“As many as 17 million people are not saving enough for the retirement, they expect so it is important people take steps to address saving gaps where possible,” he added.

“Employers also play a vital role in supporting their staff to maintain retirement saving at key life stages, including continuing employer contributions during parental leave.”

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