The 800,000 babies born in the UK last year will need to save £2.4m into their pension to retire comfortably, while facing rising student and mortgage debt and care costs for their parents. The Office of National Statistics (ONS) recently released figures showing 813,200 babies were born in the UK in 2011/12, the highest number since 1972.
Research by Scottish Widows, recently published in its ninth annual Pensions Report, claimed these babies will need a pension pot of £2.4m to have an acceptable standard of living in old age.
Increasing longevity will heap extra pension costs on this and future generations – who will also be saddled with record student and mortgage debt. Scottish Widows said those who go to university are likely to face debts of £73,000, which they will be paying off until they are 52 years old on average.
Under the new charging system, universities can raise their annual tuition fees to £9,000. Figures show the full cost of a three-year degree course now stands at an average of £25,941. This is likely to continue to rise over time.
Scottish Widows said mortgage terms are likely to be extended as people work longer and borrowers will be at least 61 when they pay them off, four years later than their parents and seven years later than their grandparents.
It adds social care costs are likely to be a major financial concern for this generation, with pressure to contribute to their parents’ care as well as setting money aside for their own – combined, these factors will make it difficult to save the huge pot needed for retirement, despite the fact this generation can expect to continue working well into their 70’s.