Why 'zedders' need to pay more attention to retirement than anyone else

One in five (20 per cent) of generation Z earning between £10,000 and £20,000 a year believe they will never retire

HAPPY new year, especially if you are a ‘zedder.' A zedder is a member of Generation Z, those of us lucky enough to be in our 20s. If this includes you, then don't miss this important new year's info.

This time last year, they did a poll of 1,070 people to find out what the most common new year's resolutions were - and the findings were shocking. They were: eat better, exercise more, and spend less money.

“What's so shocking about that?” I hear you say. Well, it's shocking that there's nothing here about improving your financial life.

“Spending less money” is not the same. As financial advisers, our motto is ‘life's better with a plan,' and you have to think about what you're actually going to do with any money you save. There's a pattern emerging in these top resolutions, too – the survey boffins at YouGov say these are more or less the same top three that turn up all the time, year in, year out.

One good plan for the money you save could be salting it away for your retirement, and just before Christmas, Scottish Widows (SW) showed why zedders need to pay more attention to retirement than anyone else.

SW found that the average saver in their 20s is going to end up a massive £6,500 a year less well off than they expect, when they retire. While in our 20s we believe we'll need an annual income of £25,000 to be comfortable, at current rates our total pension pot will only provide an income of £18,500 per year.

But it gets worse if you are one of the ‘disengaged generation' of savers who make up 38 per cent of the Generation Z population. These are the people who do not know how much they are saving, or if they are saving anything at all.

Despite also wanting a retirement income of £25,000 a year, this group will only receive £13,000 per year if automatically enrolled in a workplace pension. That's a shortfall of £12,000, or almost half the money they reckon they'll need. As ever, not working out how much you have, or knowing how much you're saving, can be the ruin of your life planning.

Saving has seldom been more difficult, so it's no wonder that one in five (20 per cent) of Generation Z earning between £10,000 and £20,000 a year believe they will never retire.

And with the difficulties of getting on to the property ladder these days, you have to ask: will I be renting in retirement? If the answer is ‘maybe,' then your pension income may have to stretch to cover thousands of pounds of additional rental costs.

Then there are another two situations where zedders have extra hurdles to jump. The first is motherhood. I'm blue in the face talking about this lately, but it's very important. If you take a career break to raise a family, that could mean a break in contributing to your pension.

Also, children are expensive little darlings, and the financial pressures of buying supplies, including finding at least three of your mobile phones down the loo during toddlerhood, all mount up and can distract you from saving.

Then there's self-employment, another subject that's been dear to my heart this past year.

Self-employed zedders are solely responsible for deciding how much should go into their pension each month. They don't get auto-enrolled into a company pension, so they miss out on the ‘nudge' to save provided by employer pension contributions and government initiatives.

SW say just 32 per cent of self-employed people between the age of 20 and 39 are saving adequately for retirement, while 41 per cent save nothing at all.

As a result, the self-employed's expectations for retirement income are lower than average, but they're still set to experience a sizeable annual shortfall of £5,000, when the time comes.

Now let's get back to our list of top ten resolutions. Number eight on the list was ‘make new friends'. Well, we're here, we're friendly, and we're waiting to hear from you. Let's get your finances sorted today!

:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information on Facebook at “Kennedy Independent Financial Advice Ltd” or via

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