Average wealthy adults plan for retirement at 63, while wealthy 18-34-year-olds, those of a younger generation, aim to retire at 58.
Younger generations are changing their financial ambitions and wanting to retire earlier than older generations, according to research from Brown Shipley.
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The private bank surveyed 4,000 UK adults and also found that hose aged between 35-54 want to retire at 61, which those 55 and over plan to retire at 66.
In addition, younger generations may be on track to meet their earlier retirement goals with 74% of wealth 18-34-year-olds having kept up their pension contribution.
However, 67% of those aged between 35-54 stated that they have maintained pension contributions while only 40% of those over 55 have.
Furthermore, 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.
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By GlobalData“There is a clear generational shift in financial-planning attitudes,” said Kenny Cummings, wealth planner at Brown Shipley. “Younger generations are prioritising early retirement and taking proactive steps to secure their longer-term wealth goals.
Cummings also spoke exclusively to PBI on the survey results:
PBI: Younger generations are often thought to be a bit doom and gloom, thinking they won’t be as well off as their parents. Is this a sign of a changing mindset?
KC: Older generations have benefitted from attractive pension schemes and the significant uplift in property prices, which has allowed them to accumulate wealth. Today’s younger generation are unlikely to experience the same fortune regarding pensions and property and are likely to be a generation of inheritance, where a significant level of wealth will be passed down from parent to child(ren).
“That said, the data shows there is a segment of the younger generation who are more aware of the costs of retirement and are taking a proactive approach in planning for the future.
PBI: Is this “less likely to pass money on” due to lack of funds or lack of interest?
KC: The data points toward a more financially savvy younger generation, anticipating costs increasing further and needing significant wealth to maintain their lifestyle in retirement.
However, there are some younger people who don’t yet have a full appreciation of the cost of retirement, so it may be that they haven’t yet worked out exactly how much they will need to retire, to maintain their desired lifestyle.
PBI: How does a firm like Brown Shipley react to a wealthy generation that retires younger? Does it even have to change?
KC: While retirement looks very different from 30 years ago, the way we look after clients doesn’t need to change. Our advice and decisions are unique to each client based on their financial situations and objectives.
A core part of this includes cash flow modelling, which helps us plan for the long-term and provide our clients with suitable advice on how to maintain their desired lifestyle whilst also taking into account key life milestones, for example retirement.”]
