Everywhere you look these days – newspapers, television, even on street corners – you can’t help but see how stressed out people are over finances. No matter how far we stretch our paycheck, it just doesn’t seem to go far enough. It appears as though payday loans are a booming industry, popping up everywhere you look. But as bad as our finances seem to be today, if we’re not careful, they could be considerably worse a few years down the road when we retire.

Money education

A major new study indicates that barely 51% of British workers are putting aside enough money for their golden years. And worse, 20% of all workers are not saving anything at all. The poor economy is not the only reason why, apparently our youth are not getting the proper advice from their elders. When it comes to giving their children advice, mum and dad are far more likely to weigh in on the birds and the bees than they are about pensions, according to a government survey. There is just no ‘culture of saving’ that exists with those who are just entering the work force. It makes you wonder. Just how do these 20 somethings plan to pay for their lifestyle when they grow old? The government agency responsible for keeping tabs on pensioners, the Office for National Statistics, indicates that barely more than half (53%) of single UK pensioners had an income in 2009 of less than £10,000. Imagine living on that. And you wonder why the faces of so many of the elderly seem so gaunt. It’s the result of being able to afford only one meal a day.

So let’s start with pensions

What exactly is a pension? Simply put, it’s a way of saving money that allows you to retire without worrying where the next meal is coming from. Not too long ago, we didn’t have to worry about that. Society was so ill-advanced that we rarely lived until retirement. Now, thanks mainly to advances in medicine, the current life expectancy is 81 years for men and 86 for women. For 16 years and more we get to sit in front of the television doing nothing, if we don’t starve to death first.

It’s very difficult for a young person 22 – 29 to think in terms of retirement. First, they think they’re going to live forever and, second, they’re too busy living the good life. That’s right, living beyond their means which makes it necessary to visit their friendly neighbourhood payday loan shop or the Internet for loans online. It’s a common joke in the industry that the only people in their 20s who are concerned about pensions are those who sell them. By the time the notion of pensions become topical, usually in their early 40s, almost 20 years of potential savings have been squandered. And it’s even worse for women. Government figures indicate that, in the UK, the number of women aged 22 – 29 who are signing up for pensions has gone down for the fourth consecutive year, the worst and most rapid decline for any age group.

The government says a retirement income of about £24,000 is needed to live comfortably. It’s not for lack of intelligence that people don’t know this. There’s just something that prevents us from saving. There is a “widespread and ingrained inertia” throughout the country, according to the Scottish Widows UK pension report, that keep savings levels down. How do we overcome that inertia? The government is taking a major step in that direction. Beginning this year, reforms to automatically put all workers into a pension (unless they choose to opt out) is expected to add a major impetus towards alleviating the country’s savings crisis. These automatic pensions have a major advantage, you won’t be able to get at the funds accrued until you actually retire.

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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk