The music that shaped your life also influences the way you save, according to new research from a leading bank.
If you were around when the Beatles were topping the charts, the likelihood is your saving strategy is different from the Guns n’ Roses generation.
The US research for Wells Fargo says the usual thinking is savers need a retirement fund of around $1 million – equivalent to about £660,000 – to fund a comfortable retirement.
But different generations face varying economic and financial issues and must take their own routes to get there.
“The different generations have different expectations for how they’re going to fund their retirement, and different ways they’re saving their money,” said Veronica Willis, an investment strategy analyst at the Wells Fargo Investment Institute.
Fear of outliving savings
In the US, 100,000 baby boomers reach retirement age every day and two out of three fear they will outlive their savings.
The bank suggests the best ways of staving off financial problems for these people is staying at work or downsizing. This will help pension savers keep their funds invested for longer, giving them time to grow more.
Younger savers still have a chance to revisit their retirement plans.
“They may be paying for their children’s education or the care of elderly parents, but they should not neglect their own retirement savings,” said Willis.
The bank’s tips for them are:
- Work out a budget and stick to it, while allocating money to paying off debt gives more money to save and invest.
- Don’t borrow to help children at university – encourage them to take cheap student loans as borrowing takes away money for saving
- Do save into a pension – Not only do your contributions attract tax relief, but you get free money in auto-enrolled workplace schemes from employer contributions and an annual government top-up
- Start your saving plan as early as you can in your working career because it will pay off in the end and don’t be tempted to take contribution holidays that will set you back financially in later years
Although the US financial system differs from that in the UK, the general financial principles still apply to British pension savers.