Almost a fifth (17 per cent) of young savers hope t retire before the age of 60, with 70 per cent expecting to retire before the current state pension age of 67.
But research from Legal & General found those surveyed would need to add a further £312 a month on top of the average 8 per cent contributions to their workplace pensions to meet their retirement goal.
This represents an additional 14.25 per cent of monthly income committed to a workplace pension.
It surveyed 2,000 young people aged 22 to 32 in August.
To retire by 67, the current state pension age, these younger savers would still need to be contributing an additional 3.5 per cent to their workplace pension, amounting to a further £72.50 a month, even with a state pension boost of £10,600 per year upon reaching retirement.
Katharine Photiou, managing director of workplace savings at Legal & General, said: “The most powerful tool young people have on their side is time.
“While retiring before 60 is still unlikely for most, putting even a little more money aside early in your career is still a good approach which will allow you to set yourself up for the best possible retirement.”
L&G said putting away an additional £312 a month in pension contributions was out of reach for most young savers, but the power of compound growth meant even small changes made early can have a significant impact on people’s retirements.
Putting £30 extra away a month from the age of 27 could see someone with £100,000 more in their pot by the time they reach the current state pension age.
“Auto-enrolment has been a huge success, which has prompted millions more people to start saving,” Photiou said.
“However, we might want to consider further changes that will ensure people have enough set aside to guarantee an adequate income in retirement.
“The announcements in last week’s Autumn Statement do not directly address the pressing issue of adequacy – people are simply not saving enough to meet their aspirations for retirement. Increasing the minimum contribution rate to 12 per cent would give most savers the means to retire at 67 with a moderate standard of living, according to our modelling.”
sonia.rach@ft.com
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