At 38, our savings go to our kids’ uni fund – I have just £20,000 in my pension

In a rare act of financial housekeeping earlier this year, I decided to confront my pension situation. This task – which has been on my to-do list for eight years – took almost the whole afternoon, which was fortunate, because once it was over I felt like I needed a drink. After hours of chasing down old employee providers and logging into the beleaguered self-invested personal pension (SIPP) account I started when I went freelance, I totted up my riches: about £20,000. I had been vaguely aware of the rough figure, but it still shocked me when a quick Google search confirmed what I’d long known deep down: at 38, I’m woefully behind on retirement savings. On average, people my age who earn £35,000 per year should have between £70,000 and £105,000 stashed away by now, according to financial advisors at Beaumont Wealth. So, how was my pot so meagre? Shorts I can think of a few reasons. My twenties were largely spent job-hopping, paying high rents, travelling and avoiding eye contact with the Student Loans Company. My early thirties were dominated by efforts to save for a house deposit, and in my mid-thirties, I held on through the financial gut punch of two maternity leaves. These days, nursery fees, rising mortgage repayments and children’s shoes are the biggest drain on my finances. Statistics show that 59 per cent of millennials are struggling to save for retirement – more than any previous generation. Despite nearing 40, only one in five consider pensions a financial priority. And there is another area of personal finance that my generation is having to be proactive about far sooner than our parents: our children’s university fees. When we first became parents, my husband and I decided we would save money every month in case either of our children – currently aged three and one – eventually want to get a degree. And with this decision came an uncomfortable but perhaps inevitable realisation: we’re part of the new sandwich generation. I always thought my mid-forties would be where things start to get hard as I would have to worry about ageing parents and caring for children. But it turns out the squeeze begins in your thirties. The moment you consider having a child, you are effectively creating a conundrum: whether to save for their future, or your own. As a result, many millennials find themselves practising this kind of “doom saving”, fuelled by a deep concern about how expensive life will be for our children when they grow up. It sounds dramatic, I know. But my generation is used to getting a bum economic deal. Previously, parents could assume that the state would heavily subsidise their children’s higher education. Now that social infrastructure is crumbling, we’re facing costs comparable to countries like the US, but without the culture of lifelong saving and scholarships. Not only are my peers hitting all the key milestones later, we now face the challenge of trying to plug that gap for our offspring. There is an irony in the first generation to be hit by student debt, bracing to fund future generations’ degrees, too, even as we fail to save for our own old age. I was part of the first cohort to take out a student loan when tuition fees were raised to £3,000 per year in 2006. Almost 20 years on, I’m still paying off that loan, which remains, bafflingly, higher than the amount I borrowed. I can’t imagine how the couples who were charged £9,000 per year from 2012 and are now having kids in their early thirties are coping. Since graduating, I’ve watched university fees triple and interest rates skyrocket with a creeping sense of dread. I’m determined to do as much as I can to help my kids avoid that financial baggage when starting adult life. ‘If I can’t pay the nursery fees that come out of my wage, then I can’t put a pension in,’ says Charlotte Owen And I’m not the only parent thinking this way. New research from Standard Life shows that 18 per cent of parents of under-18s are actively saving specifically to help their children avoid the burden of undergraduate debt – even though the same percentage admit it means paying less into their own pension. The fact that 16 per cent expect to retire later as a result points to a growing national financial predicament. “Everything is so expensive now, it’s really worrying to think about what things are going to be like in 15 years,” says Charlotte Owen, a 40-year-old self-employed journalist from Leeds and mother of two children, aged five and three. She is increasingly concerned about the current cost of higher education. “When I decided I was going to go to university, I didn’t even think about how I was going to pay for it,” she says. “I want my children to have that opportunity as well, if that’s what they want to do.” But she worries that the loans for their generation will be “extortionate,” saying: “They’re going to have such a millstone around their neck for the rest of their lives.” To mitigate this, Charlotte has been saving £150 a month for each of her kids since they turned one. Yet she frequently doesn’t pay anything into her own pension pot, which sits at about £20,000. “It is the first thing to go,” she admits, saying everyday bills have to take precedence over saving for her future. “If I can’t pay the nursery fees that come out of my wage, then I can’t put a pension in.” Does she have a retirement savings goal? “I haven’t done any sums like that,” she says. “I think that if I did, and I realised what I need, it would be too overwhelming.” I share this sense of overwhelm. My husband and I want to be saving for plenty of things: our own retirement; our children’s futures; the boiler breaking down. But this does not feel achievable in the current economy. Fortunately, his pension pot is healthier than mine, thanks to steady auto-enrollment payments over the years, but it won’t be enough for us both to live off in old age. I currently pay £50 into each of my kids’ savings accounts – £100 per month that I’m acutely aware I should probably be funnelling into my SIPP. Standard Life suggests that parents might need to save around £130 a month per child from ages zero to 18 to cover the full cost of fees, with a baby born today potentially facing a tuition fee bill of almost £43,000. According to a recent OnePoll study, total expenditure for a three-year course could top £91,000 by 2040. Clearly, at £50 per month, it’ll take a lot more than 15 years to amass that kind of money for my children. I can only hope that they don’t want to study a seven-year medicine degree. “Choosing between putting savings away for myself, putting a pension away for myself, and saving for my kids – I never have enough money in a month to do all three,” agrees Charlotte. Like many parents, she often puts the children first. But a retirement crisis is looming, and the clock is ticking. “I feel like we’re running out of time to make it right.”