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What are Brits saving for in 2021?

by LLB Editor
19th Jul 21 9:53 am

The COVID-19 pandemic has shaken up our attitudes towards how we deal with money, with furlough and job cuts causing nationwide financial anxiety over the past year, many have been forced to consider the value of their expenses – and savings.

New research from money.co.uk examines the cross-generational divide in how Brits view their current financial situation, as well as how they are managing their money following the pandemic. 

Salaries: spend or save?

The data reveals that Gen Zers (18-24) are placing the biggest focus on savings, with the generation admitting to saving on average nearly a fifth of their monthly pay (17%). This is followed by Millennials (25-40) who are saving on average 11%, and Gen X (41-56) saving on average 10%. 

It’s not just an age group split, there is also a clear regional divide when it comes to money management; with those in the North East saving on average 22% of their monthly pay, while Londoners are only managing to save 11%. 

So, once the bills have been paid, how are people spreading the rest of their salary? For Gen Z Brits, almost a third (32%) are giving priority to saving up for a home. However, for remaining Brits, it seems that the beach is calling as 41% of Gen X respondents say they are prioritising savings for their next big holiday, followed closely by 38% of Millennials.

Cross generation salary priorities

Gen Z Millennials Gen X
1. Saving for a home (32%) 1. Saving for a holiday (38%) 1. Saving for a holiday (41%)
2. Money to spend on material goods (31%) 2. Money to spend on material goods (34%) 2. Money to spend on material goods (35%)
3. Saving for a holiday (28%) 3. Saving for a home (30%) 3. Saving for a pension (27%)

Pension plans

But what about pensions? Gen X is the only generation to place them as one of their top three priorities (27%). For Gen Z, pensions came in at the lowest priority, with only 8% confirming they prioritise it within their salary, and retirement savings coming in 6th spot (15%) for Millennials. 

44% of Gen Z individuals say they are prioritising buying a house over saving into their pension, with nearly three quarters of the respondents within this age group saying they have plenty of time to save for retirement. Likewise, 36% of Millennials are prioritising getting on the property ladder, with over half of respondents within this age group also agreeing they also have time to save for retirement. 

It seems however that Gen X is realising the importance of saving for retirement, with nearly 20% saying that they are prioritising saving into their pension as opposed to buying a house. That said, as the oldest group represented, it should be pointed out that hopefully more of them are already homeowners than the other two generations.

These generational differences in attitude could be a result of pension misunderstandings, and not having a clear understanding of how much exactly should be paid into a pension. 

Cross generation, there is a disparity when it comes to how much people contribute to their pensions, with Millennials least likely to make additional contributions on top of their auto-enrolled amount. Despite this, Brits are in agreement that on average around £22,500 a year will be needed for a comfortable retirement:

Cross generation pension breakdown

  Gen Z Millennials Gen X
Make additional contributions on top of auto-enrolment 23%  17%  25% 
Opt out of all contributions 17%  15% 10% 
Don’t know how much they currently pay 23%  23%  26% 
Average they believe will be needed per year to live on in retirement £22,612.11  £22,944.41 £21,779.23
% who believe this figure is unachievable 25% 21% 26% 

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