Young workers in Britain are increasingly anxious about their financial futures after new projections suggested they will need more than £3 million to retire comfortably.
The estimate, from wealth manager Rathbones, is based on data from industry body Pensions UK and projected inflation over the next six decades. It found that a 25-year-old today would need a retirement income of around £97,000 in 65 years’ time to maintain what is currently defined as a “comfortable” standard of living.
The astronomical figure includes one foreign holiday a year, several UK breaks and about £75 a week for food and drinks.
To reach that income level, Rathbones said a pension pot of £3.1 million would be required, meaning monthly contributions of about £1,600, assuming average pay rises of 2 percent and investment growth of 5 percent. Even with an employer contributing the minimum 3 percent, an employee would still need to find £1,000 each month.
Rising costs, falling confidence
For many young workers, the target feels impossible. “It’s somewhat disheartening to think that if you’re not already saving about £1,000 a month, then you’re not going to hit that £3 million point,” 25-year-old communications consultant Anna Kiff, from Brighton, told The Times.
“I’ve seen loads of reports of people who are approaching retirement and they don’t have anything saved, and that seems terrifying — even more so for us looking at that £3 million figure — so I’m still trying to set myself up for success.”
Another 25-year-old, Tristan Vandenberg, from Burgess Hill in West Sussex, said he had been saving since he was 16 yet still doubted he would ever reach the required sum.
“I started work at the earliest I could do but looking at the rate of return I’m getting from my pension, it is going to take a very, very long time for it to even reach the sum required for a minimum lifestyle,” he said. “I work probably in the most lucrative industry on the planet at the moment, but because everything is so expensive now, it’s really hard to save and look after your future self.”
The calculations from Rathbones did not include the state pension, which many younger workers fear will not exist in its current form by the time they retire. A Skipton Building Society survey found that 34 percent of Generation Z and millennial employees could not think about retirement because of more pressing financial priorities, while one in four said they did not earn enough to save.
Questions over state pension
The state pension is currently protected by the “triple lock”, which guarantees annual increases in line with inflation, wage growth or 2.5 percent, whichever is higher. Payments rose by 22 percent between 2022 and 2024 when inflation reached double digits, and are due to rise by a further 4.7 percent next April.
But economists have questioned how long the guarantee can last. Karl Williams of the Centre for Policy Studies told The Times that it was “unsustainable over the medium to long run. If we want to keep per capita spending on pensioners as it is now, we’d need annual GDP growth of 2.9 percent — the OBR is forecasting annual growth of just 1.4 percent.”
High student debt and unaffordable housing have compounded the problem. The average graduate debt in 2024 stood at £53,000, while house prices are now almost eight times greater than average wages, according to the Office for National Statistics.
Priya Khambhaita from the Pensions Policy Institute, an independent research charity, said while the challenge was severe, there were reasons to remain hopeful. “There’s resilience in this generation. If that can be combined with persistence so that they do start saving as soon as they are able, then that will make a big difference in the long term.”
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
