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\t\tRathbones said it was \u201cshocking\u201d that Gen Z needed to stockpile so much money to retire comfortably (AI-generated image)\t<\/p>\n\t\t\tTuesday 30 September 2025 6:00 am
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\t\tRathbones said it was \u201cshocking\u201d that Gen Z needed to stockpile so much money to retire comfortably (AI-generated image)\t<\/p>\n
People in their 20s will need at least \u00a33m pension pot if they want to enjoy a comfortable retirement, a fresh study has shown, throwing into sharp relief the corrosive impact that inflation has on savings.<\/p>\n
According to an analysis from Rathbones<\/a>, a 25-year-old today will need a pension pot of \u00a33.1m if they want to live comfortably for quarter of a century after retiring at 65. <\/p>\n The number, which the wealth manager arrived at using the Pensions and Lifetime Savings Association\u2019s definition of a \u2018comfortable retirement\u2019 and assuming two per cent annual inflation, is more than double the current estimate of \u00a31.4m you need for a decent life when you retire.<\/p>\n In order to build up a \u00a33.1m nest egg, a 25-year-old would need to save roughly \u00a31,600 per month \u2013 just shy of \u00a320,000 per year \u2013 assuming their contributions increase by two per cent annually and their pension pot grows at an average of five per cent a year. <\/p>\n For a two-person household in which both Gen Z individuals are aged 25, the figure needed for a comfortable retirement rises to \u00a34.3m, Rathbones said.<\/p>\n \u201cThe [\u00a33.1m] figure is shocking and serves as a start reminder of how inflation can quietly erode retirement savings,\u201d said Rebecca Williams, financial planning lead at Rathbones. <\/p>\n \u201cWhile a comfortable retirement means different things to different people, young generations face higher hurdles \u2013 from high housing costs to student debt \u2013 while also needing to ensure their savings stretch further to account for greater longevity.\u201d<\/p>\n Bank of Mum and Dad already helping Gen Z pensions<\/p>\n The analysis also found that a \u2018moderate\u2019 lifestyle would require \u00a32.2m for a single person, and \u00a33.1m for a two-person household. Gen Z savers would need \u00a3947,700 to live a \u2018minimum\u2019 lifestyle.<\/p>\n Williams added that wealth managers were increasingly seeing the \u2018Bank of Mum and Dad<\/a>\u2018 step in to top up their Gen Z children\u2019s pension pots with gifts or by setting up junior SIPPs.<\/p>\n \u201cStarting early and saving consistently is key; even modest, regular contributions can grow substantially over time,\u201d she said. \u201cWith a longer investment horizon, younger savers can typically afford to take on more risk, potentially boosting returns. Regular pension top-ups benefit from compound growth and tax relief, while maximising workplace pension contributions \u2013 especially employer matches \u2013 is essentially free money.\u201d <\/p>\n It is also likely that the study has underestimated the size of the nest egg needed for a comfortable livelihood in retirement. Many analysts<\/a> believe the speed of price rises will remain above the Bank of England\u2019s official two per cent target for several years as the country battles to free itself from a sustained period of \u2018stagflation\u2019, where slow economic growth clashes with high inflation.<\/p>\n \t\t\t\t\tRead more<\/p>\n