A generation of young Britons saddled with thousands of pounds of debt face a future pensions crisis, research warns.
Burdened with servicing debts of more than £20,000 each, nearly a quarter of people under 40 say they do not save into a pension because they can’t afford to, Prudential claims.
With the cost of education soaring and many forced to wait until later in life to get on the property ladder, nearly half of under-40s not setting anything aside for their retirement say they can’t due to their debts.
Debts levels peak at around £33,113 for Britons aged between 31 and 40, with many burdened by mortgage repayments and hefty credit card bills.
This falls to roughly £30,200 for the 41-50s, and £12,600 among 51-65 year olds, Prudential’s Intergenerational Retirement Study shows.
Soaring levels of debt aren’t simply affecting people’s wallets. The findings also reveal that 55 per cent of people in debt aged between 21 and 30 believe it affects their ‘happiness and well-being.’
With many younger generations struggling with debts, older generations are often left helping them out financially.
Fifty-three per cent of over 1,000 people surveyed aged between 51 and 62 said they can’t contribute to their pension due to ‘family costs.’
Kirsty Anderson, a retirement income expert at Prudential, said: ‘Saving into a pension has always been about building up a retirement fund over the long term.
‘But our latest research shows that modern-day financial pressures are forcing people of all ages to risk their future by putting pension saving on the back burner.
‘It is particularly concerning to see a new generation of workers who have spent years clearing student debts only to be forced to wait much longer than their parents to get a foot on the housing ladder.
‘As a result people in their 30s and 40s, instead of making the contributions that could make a meaningful difference to their retirement pot, are struggling to save for a deposit, make mortgage payments or simply support their families.’
With pension savings often invested for 30 years or more, even small employee contributions while people are in their 20s and 30s can make a difference, the findings add.
While some are unable to contribute to a pension due to debts, others are in denial about what age they need to retire at to have sufficient funds for their retirement.
According to a separate study by Prudential released last week, many thinking they can retire at age 62 are in for a nasty shock.
Vince Smith-Hughes, a retirement income expert at Prudential, said: ‘The desire to retire as early as possible is completely understandable, but with life expectancies increasing all the time and the average retirement now lasting over 20 years, it is unlikely to be achievable for everyone.’