Why don't young people save for their old age?

Young man with piggy bank (money box), isolated on white background

Pensions are increasingly becoming about the haves and the have-nots, and by association the young versus the old, but what should we believe when it comes to answering the question of who is to blame for this divide?

Research by the Institute of Fiscal Studies has caused the latest stir in the pensions world. It claimed that those born in the 1960s and 1970s and now aged mid-30s to 40s, would only better off than their parents in retirement if they inherited a substantial amount.

And before you go accusing those generations of being feckless and saving too little, the report also rebuffs this myth stating that the group did not have higher take home pay and saved no more of their income than previous generations but were unlikely to own a home, have lower private pension savings and will benefit less from the state pension.

In other words, they didn't waste their money, they couldn't afford to save it.

This idea has been rebuffed by pension commentators who say that savings rates have been steadily dropping and that younger generations live for the now rather than thinking about the future.

It's a predictable argument that fails to take in to account affordability. It assumes that younger people do not care about saving or retirement, that they'd rather go out and get drunk or invest in the latest gadget that get their finances in order. While that may be true of some, it is certainly not the reality for many.

Young people are saving, they're just saving for a different reason; property. Why would they put money into a pension when they are still paying someone else's mortgage in rented accommodation? How can they afford to put money into a pension when the government has saddled them with thousands of pounds of debt just for getting an education?

Did anyone think that maybe the young aren't saving into pensions because they have been hit hardest by unemployment, are paying inflated rental incomes and bills, and struggling to get by on meagre earnings that are failing to grow in line with inflation.

It's easy to demonise young people and assume they waste their wealth but there are many in a precarious financial situation who would love to be able to put money aside each month to know they will not have to struggle financially in old age, the way they are struggling now.
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