Two thirds (66 per cent) of Millennials are worried they are not saving enough for retirement, making them the most concerned generation, Standard Life’s Retirement Voice report has revealed.

This financial anxiety is driven by short-term pressures, with 73 per cent of Millennials worried about inflation, the highest among all age groups, while 53 per cent are concerned about rising interest rates.

In contrast, 60 per cent of Generation Z and 57 per cent of Generation X shared retirement savings concerns, but 48 per cent and 29 per cent, respectively, were worried about interest rates.

Meanwhile, 24 per cent of Baby Boomers said they were worried about not saving enough for retirement and 14 per cent are concerned about rising interest rates.

Despite Generation X not being as concerned as Millennials about rising interest rates, over half (54 per cent) are nervous their finances will not last for the duration of their retirement.

Standard Life said that this could be due to the risk of “falling in the gap” between the decline of defined benefit (DB) pensions and the introduction of defined contribution (DC) auto-enrolment in 2012.

In addition to this, the report showed that every age group worried about inflation, with Millennials and Generation Z being the most concerned at 73 per cent.

It also revealed that 67 per cent of Generation X and 56 per cent of Baby Boomers felt the same.

The report suggested that Millennials have increased financial vulnerability due to their life stage which is often when people buy a house or start a family.

However, Standard Life argued that Millennials have “time to act” as its calculations found that those on a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions (5 per cent employee, 3 per cent employer) from the age of 22, they could have a total retirement fund of £210,000 by the age of 68. This is adjusted for 2 per cent inflation a year.

Additionally, those who increase their contributions by just 2 per cent at the age of 30 could have £252,000 in today’s prices at the age of 68 – £42,000 more.

An increase of 2 per cent at the ages of 35 and 40 could lead to an additional £36,000 and £30,000 respectively.

Commenting on this, Standard Life retirement savings director, Mike Ambery, said that Millennials seem to be aware that they are under-saving and could be more inclined to act, when possible, suggesting that this is “good” news for the long-term.

In addition to this, he said they are also likely to have been auto-enrolled into a pension from an earlier age than their predecessors Generation X, meaning they are more likely to have at least a basic level of pension savings to build on.

“Then, they have the gift of time – the oldest Millennials are still over 20 years from state pensions age and could boost their pot between now and retirement,” he continued.

“Raising pension contributions can involve a trade-off between short and long-term financial pressures, but it’s incredibly tax efficient and, thanks to the power of compound investment growth, even a small increase can build up and make a huge difference.”

Ambery said that Millennials are also set to become the wealthiest generation in history due to the fact that Baby Boomers are set to hand down trillions worth of assets but said this will not benefit everyone equally.

“It is important people make sure they provide for their financial futures,” he said.

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