Young people need to save for retirement now

While it may seem like a long way off, young people should starting thinking about making savings for when they retire.

The comments were prompted by a YouGov survey about auto-enrolment, which found that many people do not have the confidence in pensions to invest in them as a means of saving for retirement.

Only 36 per cent of men were confident that pensions were the best way forward, while women are even more wary with only 23 per cent saying the same.

Younger people appeared to be less confident about pension savings, with only four per cent of 18 to 24-year-olds and five per cent of 25 to 35-year-olds claiming to be 'very confident' that the schemes are the best way to save for retirement.

From next year though, the majority of people will be automatically enrolled onto an employer-backed pension scheme, with the option to opt out should they choose.

"We do need to be encouraged to save, so I think auto-enrolment is very good from that point of view," said Annie Shaw, founder of Cashquestions.com.

Getting employer contributions definitely helps a pension pot to grow, so auto-enrolment is worthwhile even if people cannot make any savings themselves.

For this reason, Ms Shaw stressed that people should take advantage of this if they can, adding that the government would no doubt hope that very few people would opt out.

"It is really about making the value of retirement savings a worthwhile activity. The welfare state will be very different by the time young people come to retire and so they need to be making provisions now," she added.

Ms Shaw said that when young people come to retire, should they not need to live off the money they have saved it can then be used for something else.

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2011-12-07 13:24:26 © Moneyextra.com