I’m sure you’ve heard “it’s me or the dog!” shouted plenty of times in films (and perhaps in your living room), but have you heard of “early retirement or a kid?”
I’m going to wager no, and yet that’s apparently what Generation Z – adults aged between 18 and 23 – are considering as they mull the merits of early retirement versus parenthood.
PensionBee quizzed 2,000 UK adults across three generations and found just more than one in 10 (11%) Gen-Zers are considering not having children so they can retire early, while 4% of Millennials (aged 24-40) share this sentiment.
As somebody moderately allergic to children, and as a person who often finds herself fretting about retirement on both a personal and collective front, this is nothing if not creative thinking in my book.
But this creative thinking may need to stretch a little further if Gen Z, Millennials and – even more urgently – Gen X (aged 41-54) are to retire with anything resembling a reasonable-sized pension pot.
Pension pot disparity
PensionBee’s research found Gen X, unsurprisingly, have larger pension pots than either of the younger generations.
With that said, the average Gen X pension pot is a meagre, anxiety-inducing £33,547.
To put that into context, separate research from consumer brand Which? found retired households spend a smidge under £2,100 a month, or around £25,000 a year.
Even allowing for the state pension (around £9,300 per year) on top of a Gen X pension pot, and assuming Gen Xers are all coupled up, if PensionBee’s 41-54 cohort were to retire early, the odds are they’d be penny-pinching on the state pension in just a few years.
According to PensionBee, the average Millennial pension pot is £22,049, while Gen Z are, apparently, hot on their heels with an average pot of £21,765 – a number I find very difficult to compute and almost can’t believe to be true, though likely down to the recent-ish introduction of automatic enrolment.
Though unimpressive for now, Millennials and Gen Z at least have time on their side, and plenty of years to plough as much money into their pensions as possible.
Much is made of wars between the generations (in case you’re not caught up with internet culture: Millennials can’t stand Boomers, Gen Z can’t stand Millennials, and Gen X are good at quietly avoiding conflict with everyone).
But the generations are united in their desire to retire early, with Gen X wanting to retire at 61, while both Gen Z and Millennials think 58 is an excellent age to throw in the towel, put their feet up, and join a country club.
But for the average Gen Z and Millennial, it’s fanciful to think early retirement could be on the cards without significantly upping their retirement savings.
Forget not having kids; at this rate, it might be time for 24-54-year-olds to forgo pets, holidays or new clothes if they want to leave the office before 60 permanently.
The retirement generation gap appears stark, with Gen X clearly on track for a tougher time in their twilight years than their younger counterparts.
The good news is that younger generations – particularly Gen Z – appear to be paying more attention to their pensions; less than a quarter (23%) of the TikTok generation confessed to not knowing how much they’d saved for retirement compared with more than a third (34%) of poor Gen X.
But while the picture looks rosy for the youngest generation, it’s important to remember that Gen Z may not have the same income as older generations, as salary growth continues to lag behind ever-rising house prices.
Thinking about what the future might hold for retirees is uncomfortable. With the death of the defined benefit (‘final salary’)pension, the onus is firmly on the individual to put away as much money as possible for later life.
A comfortable retirement isn’t out of reach for most people, but it does require a considerable commitment to saving for the long term.
With younger generations, in particular, facing multiple financial hurdles before they can even consider retirement saving a priority, I think the reality is we’re all likely to be working longer – whether we have children or not.