At 26, I’ve saved £14,000 in my pension – it’s more important than homeownership

In our Pension Diaries series, we speak to people of all ages in the UK to find out how much or how little they have saved for retirement and the realities of putting money aside for your future. This week, we speak to Jaimeson Milne, 26, who is about halfway through a 27-month graduate scheme with Severn Trent Water. Jaimeson says he did not know a lot about money growing up, but became extremely interested in pensions after starting his job and is investing into his future. However, as he wants to keep his brain active for as long as possible, he currently has no aspirations to retire early and thinks he will carry on working until close to death – although he recognises that he might change his mind after decades of working. Shorts Tell me about your career and how you got into it I grew up in a town in the south east of England, but am now living in the Coventry area as that is where I work. I studied chemical engineering at the University of Bath. I knew I definitely wanted to go into some form of engineering and I applied to Severn Trent Water and got on their graduate scheme, which is 27-months long. I am over halfway through it and am really enjoying it as I am involved in a variety of projects and some of them are quite high profile. I feel incredibly grateful that I have a job where I am learning and developing as I know there are a lot of young people who are struggling to find work at this moment in time. What is your attitude to money? My family background is working to middle class and growing up, we never went without, but did not have lots of luxuries. When I was living at home, I was a saver but when I went away to university, I found myself struggling money-wise, so I got a part-time job as a waiter in a restaurant during the last couple of years of my studies. Jaimeson with his mum at his graduation I was the first person in my family to go to university and we did not know a lot about money when growing up. When did you first become interested in pensions? I started learning about money and pensions after starting my graduate job. We had a session at work which sparked my interest in pensions and then I started doing my own research. After researching pensions, I realised how starting investing early in your pension has a massive impact on the size of your retirement pot. Severn Trent does quite a good pension scheme as if I put in 7.5 per cent as my personal contribution, they double match and put in 15 per cent. I have 22.5 per cent going into my pension each month. To me, it makes complete sense to pay in the maximum amount I can afford as it is essentially free money. When you are younger and putting money into your pension, it has a lot longer to grow and it has a bigger impact further down the line. I am honestly surprised at how little people know about money. The UK is a big advocate for property ownership with about 65 per cent rate of home ownership. But this is only one way of storing wealth. Countries like Switzerland have a much lower home ownership rate at around 42 per cent – but people have a much higher life satisfaction. So, I’m not sure if home ownership increases happiness. How many pensions do you have and what is the estimated value? I have been paying into my Severn Trent pension for two years. It is a defined contribution pension and the pot currently has about £13,500 in it. My pension was initially invested in a default pension fund, but then I changed the investment to a world equity fund. Then about a year ago, I changed it to just US equities as after looking into it, I saw that the US has a long and solid track record for high growth. When I was working part-time as a waiter while at university, I was automatically enrolled into a pension. That has got about £500 in it and I need to look into transferring it across. I am also saving into a stocks and shares ISA, but I don’t have a clear goal for this. It might be for a property, although I am not entirely keen as you are only on the planet once and buying a property feels a bit restrictive. My ISA might end up being for retirement too as I’ll be able to access my investments, while pension terms are subject to change. What are your aspirations for retirement? I know that pensions are one of the most effective ways to save for old-age as you can benefit from tax relief, as well as employer contributions. However, it is difficult to lock away money with the cost of living crisis, so diversifying where you keep things is important to ensure you don’t come into financial struggle. I know a lot of people dream of retiring early, but I think that ideally, I would want to keep working until close to death – but that’s more to keep my brain ticking. Keeping active and trying to do things for as long as possible is important to me as I fear my brain and body degrading towards the latter stages of life. Some people want to retire early but if you end up living until 90 or 95, that could be 40 years, which is a significant proportion of your life. I am not sure I could be in relaxation mode for that long. Jaimeson currently feels like he would be happy to keep working until close to death I appreciate that I may change my mind after 30 years of working and think that I can’t wait to stop working. Hopefully, my pension can act as an insurance, such as to cover care costs if needed or help my future children and grandchildren, or give away to an education charity to help less fortunate children, rather than to fund a luxury lifestyle. I still like to do things today, like travelling and keeping active, so I will try not to overdo it when saving for the future as time is the one thing you cannot get back. What barriers do you think young people face to saving for a pension? Just finding a job is difficult enough for a lot of young people at the moment, so pensions are often low on their list of priorities. The cost of living is also eating into people’s disposable income a lot more, which makes it harder for young people to put money away for the future because they need it now. I don’t think the importance of pensions is highlighted enough to young people. Would you like to be featured in Pension Diaries? E-mail: Aasma.day@theipaper.com