Counting your chickens? One in four Gen Z neglect retirement savings, betting on an inheritance instead

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• A quarter of Gen Z (24%) say they’re not prioritising saving for retirement, expecting an inheritance to fund their later life
• With inheritance pots under pressure from rising care costs, longer life spans, and planned upcoming tax changes, Standard Life shares ways to boost your financial future

A large proportion of younger people are deferring retirement saving in the hope that an inheritance will plug the gap, according to research¹ from Standard Life’s Retirement Voice report. A quarter (24%) of Generation Z (those born between 1997-2012) say they’re not currently focused on retirement because they expect to receive money or property in the future. A similar proportion (23%) of Millennials (those born between 1981 - 1996) also share this view.

However, relying solely on inheritance to support retirement could prove to be a risky bet. Various factors, such as people living longer, increasing care needs, and rising living costs, mean estates may be more stretched than younger generations anticipate. Furthermore, the Government’s planned 2027 changes to inheritance tax, which will bring unspent pension pots into scope, could also reduce what’s passed on.

Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group commented: “It’s understandable that younger people may not see retirement as an immediate priority, especially when everyday costs feel more pressing, and they have more immediate financial goals like saving for a house deposit. Many may be banking on future financial support and while it’s true that Millennials and Gen Z are set to benefit from a significant wealth transfer from Baby Boomers over the coming years, inheritance is rarely guaranteed and it could come later in life, or not be as much as expected.

“With so many variables, from care costs to potential tax changes, it makes sense to plan and build your own retirement savings, even if you hope to receive a boost later. Fortunately, there are straightforward and flexible ways to start building a retirement pot over time. By starting early and contributing little and often, people can take advantage of tax efficiency, employer contributions and potential compound investment growth, and help improve their financial security in later life.”

Dean Butler shares his key tips for those looking to maximise their pensions savings ahead of retirement:

1. Make sure you’re taking advantage of all the benefits of your pension plan, and your employer offers - “If your employer offers a matching scheme, where if you pay additional contributions your employer will match them, consider paying in the maximum amount your employer will match to get the most out of it.”
2. Keep an eye on how much is in your pension, on a regular basis – “If you know how much you have, you can work out how close you are to the retirement lifestyle you want. As UK workers now move jobs every 5 years on average, you might find you have a number of small pots - it might be worth considering bringing them all into one to make your savings easier to track.”
3. Getting a bonus this year? “Deciding to pay some or all of your bonus into your pension plan could save you paying some big tax and national insurance deductions. Meaning you could keep more of it in the long run, and it could be a great way to give your pension savings a boost.”
4. Even a small amount could make a big difference in the long term, especially if you’re starting young - “If you’re able to, think about paying a little more into your pension when you get a pay rise or have a little extra savings.
5. Make sure your pension investments are working for you – “Pensions are investments, which means they have the potential to benefit from greater returns than cash savings but their value can go up and down. Try not to worry too much about any short-term dips as pensions are a long-term investment, and markets typically recover over time. If you’re unsure where your pension is invested, or whether it matches your goals and risk appetite, it’s worth speaking to your pension provider.”
6. Pensions are one of the most tax-efficient ways to save for the future “When you pay into your pension, you usually get a boost from the government in the form of tax relief – this means some of the money that would have gone to tax goes into your pension instead. If you’re a higher or additional rate taxpayer, the benefits can be even greater. It’s a smart way to make your money work harder for your future.”

 

ENDS

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Notes to editors

¹Standard Life’s 2024 Retirement Voice report. Ipsos Mori conducted research among 6,000 UK adults. Fieldwork was conducted between July and August 2024. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics.

About Standard Life

• Standard Life is a brand that has been trusted to look after peoples’ life savings for 200 years.
• Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.
• Standard Life is part of Phoenix Group, one of the largest long-term savings and retirement business in the UK. We’re proud to be building on 200 years of Standard Life heritage together. Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
• We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs and plan a future they feel confident about.
• The value of investments can go down as well as up and may be worth less than originally invested.