Although more millennials are making pension contributions, the fact is that they are making fewer total savings than previous generations. The question of why this is happening is vital to understand, especially when looking at the pension habits of older generations. Generation Z have managed to double their pension wealth over the same period, meaning that something is very wrong with how millennials are being educated about the essential nature of retirement saving. Understanding what pensions are and how they are more beneficial than traditional savings accounts is more important than ever. For a safer and more stress-free future, it’s essential that millennials are given access to more pension resources and advice.
That’s why Portafina has collected all of their resources together. Highlighting the importance of pension savings for a retirement that suits your ambitions, they have collected their guides and advice in one easy to find place. This is intended to make pensions easier for everyone to understand, and when even the over-55s have said that they would prefer there to be more available information about pensions, it’s clear that this resource is invaluable.
How Pensions Work
One of the reasons why millennials are not prioritising their retirement savings is because 53% of them are confused by them. Not understanding about what pensions are or the best ways to get more from them makes it easier to dismiss. Tax breaks and employer contributions can boost your pension savings so that you have a much larger amount to retire with. This can have a massive effect on your retired lifestyle, but millennials that don’t understand how pensions work are missing out.
Depending on your age and your earnings, employers are obligated to provide workers with a workplace pension. This is often dismissed, but due to the fact that the employer has to make contributions into your pension on top of your own, your final pension will be considerably higher. New changes to the law in April 2019 will mean that those employer contributions are even higher. Never underestimate the value that a workplace pension can provide you with.
Taxes and Pensions
Another one of the areas where people get confused about their pensions is the tax benefits that your contributions can provide you with. When you pay money into your pension, the government then pays you a refund on any income tax that you have paid. This leads to some serious savings, although there remains a limit on how much you can save. However, when combined with the wide variety of tax breaks that are also available, the savings that you make and the payments that you contribute can result in a snowball effect that leads to a much higher pension than you might have assumed. Look at some of the advice from Portafina Discovery, and you will have a greater level of understanding when it comes to saving much more for your retirement.
The high cost of living can make it a challenge to consider a distant retirement. Millennials are set to face increasing difficulties when it comes to the day that they finally retire, which is why you need to start learning about what pensions are and how they work. Portafina offer a wide range of resources and advice for those that remain confused by pensions, and can be found on @Portafina_UK, LinkedIn, Facebook, and YouTube.