About 41% of millennials (those born between 1980 and 1997) have not started saving for their retirement, compared to 35% of Gen X (those born between 1966 and 1979) and 29% of baby boomers (those born between 1945 and 1965), according to new research from HSBC.
Whilst millennials are aware that global market conditions are not optimal, they have not shown the willingness to start saving early. The sentiment from older generations is reflective of this attitude; in fact, 57% of people said that the young generation does not know how good they have it, enjoying a better quality of life than any generation before it.
Still, the study found that 51% of working age people across the country agree that millennials have experienced weaker economic growth than previous generations, a perception in line with the global average (53%).
Alarmingly, it revealed that more than half the people in the UAE (53%) believe millennials are paying for the economic consequences of previous generations.
HSBC’s “The Future of Retirement: Shifting Sands”, a survey of 18,414 people across 16 countries and territories, including 1,127 people in the UAE, provides insights into key issues associated with the increasing life expectancy around the world and its impact on peoples’ retirement prospects.
Around half of millennials in the UAE agreed they will live much longer and will need to support themselves for longer than previous generations. In fact, this generation is expected to cover for an average of 16 years of retirement, compared to 15 years for Gen X.
Despite knowing this, millennials express unrealistic aspirations to retire two years younger, at the age of 56, than other generations while having more years to cover for during their retirement.
“Our study shows that around two thirds of people in the UAE are aware that it will be more difficult to save for a comfortable retirement following the global financial crisis in 2007-2008. Therefore, it is not surprising to see that only two in 10 of people in the UAE think millennials are in the best position for a comfortable retirement.” said Mr Matthew Colebrook, Head of Retail Banking and Wealth Management, MENA and Turkey, HSBC Bank Middle East.
Readiness to take bold measures
More than two thirds of millennials (67%) are amongst the most concerned about running out of money affecting their retirement. As such, they are ready to take bold measures to counter these concerns: 71% are prepared to cut back on their present expenses to save, compared to 68% of Gen X and 66% of baby boomers.
In addition to curbing their spending, the young generation tops the list of risk takers. Around half of millennials are very willing to make risky investments to ensure their financial stability, compared to 35% for Gen X and 34% for baby boomers. By the same token, 52% of millennials actively move their money around to get the best return on investment, like the older generations.
As the retirement landscape continues to change at a rapid pace, there seems to be a wide consensus among the UAE working-age people that bolder measures and even compromises to some extent are needed in the face of deteriorating retirement prospects.
For example, 63% of working-age people say they will continue working in some capacity in retirement; 79% would be willing to defer their retirement for two years or more to have a better retirement income; and 44% would work for longer or get a second job to sustain their saving for retirement.
Financial guidance to navigate unchartered territories
The shifting factors shaping the retirement scene are forcing people to adjust their expectations for retirement, whilst making it increasingly difficult to plan. As such, 80% of millennials see saving as a difficult but necessary task, compared to 77% for Gen X and 74% for baby boomers.
However, it is reassuring that 67% of millennials in the UAE would actively seek financial advice and realise the importance of speaking to experts, compared to 61% globally and ahead of more mature markets like the US (63%) and the UK (46%).
The survey confirmed this sentiment with 65% viewing property as offering the best returns of retirement but unfortunately, only 6% have factored this in their retirement plans. M