Younger generations are redefining their financial ambitions and aiming to retire earlier than older generations, according to new research commissioned by Brown Shipley.
The average age of planned retirement for wealthy individuals in the UK is 63, but this decreases for younger generations, with 18-34-year-olds aiming to retire at 58. According to the results of a survey of 4,000 UK adults, the planned retirement aged for wealthy UK adults gradually increases as they age. On average, those aged 35-54 plan to retire at 61, while those aged 55 and above plan to retire at 66.
Younger generations may be on track to achieve their earlier retirement goals, with almost three-quarters (74%) of wealthy 18-34-year-olds having maintained their pension contribution despite the rising cost of living. By comparison, 67% of those aged between 35-54 say they have maintained their pension contribution, a figure that drops to 40% for those over 55.
On average, just over half (55%) of wealthy UK adults have maintained their pension contribution despite the challenging financial environment. Men are more likely to have increased their pension contributions, with 20% having done so compared to 16% of women.
Despite signs that younger generations are less likely to have had their pension planning impacted by the rising cost of living, this is not necessarily the case when it comes to passing on wealth. Younger wealthy UK adults are more than twice as likely as older generations to say they do not plan to pass on wealth as they believe they will need the capital to cover their own costs in later life. Over two-fifths (43%) of affluent 18-34-years-olds do not plan to pass on wealth due to rising costs in later life, compared to 37% of those aged between 35-54 and 20% of those over 55. Kenny Cummings, Wealth Planner at Brown Shipley, said:
“There is a clear generational shift in financial-planning attitudes. Younger generations are prioritising early retirement and taking proactive steps to secure their longer-term wealth goals.
This may reflect increased awareness of the escalating costs associated with later life, such as the high cost of long-term care and increasing healthcare spending. As this research shows, younger Brits perceive the need to safeguard assets to cover personal expenses in retirement and ensure their quality of life in later years.
There are signs that younger Brits are laying especially strong foundations to realise their retirement ambitions, no matter the economic conditions. Long-term wealth planning continues to be important for all generations, however, as everyone must continually align their personal financial goals with the variety of challenges that may come one’s way.”
