Workplace trends driven by social media are predicted to have a significant impact on younger workers’ long-term savings, according to analysis from pensions provider Standard Life.
The provider examined the #corporatelife trend which is currently going viral on social media platforms such as TikTok, YouTube and Insta. Popular with Gen Z, the trend is being driven by young professional influencers posting about their careers and workplaces.
It uses terms such as ‘locking in’, which refers to concentrating on work goals, prioritising career progression and maximising income, and ‘unbossing’, which refers to steering away from traditional career routes to focus more on work-life balance.
The provider highlighted that salary growth rates can affect pension outcomes, with differences of up to £80,000 (38 percent) between the different career approaches.
Standard Life, part of Phoenix Group, said that most people are likely to experience some ‘locked in’ days and some ‘unbossing’ days, but that the trends reflect the influence of social media on how younger workers approach #corporatelife and work in general.
The provider said that an employee starting work at age 22 on a salary of £25,000, making the minimum auto-enrolment pension contributions of 8 percent of their salary (5 percent employee, 3 percent employer) could build a pension pot of £210,000 by the age of 68. This figure illustrates what is possible and is adjusted for inflation of 2 percent and assumes an annual management charge of 0.75 percent, the provider explained.
But people that focus on an accelerated career growth, achieving average annual salary increases of 5 percent, could see their retirement fund grow to £290,000. This would “significantly” improve their financial position later in life, Standard Life said.
However, pensions are a long game and someone achieving modest, but stable, salary increases of 3.5 percent a year could still ultimately retire with more than someone focused on career progression and salary increases. For example, an employee earning high 5 percent annual increases by climbing the career ladder might decide to retire earlier at 58 rather than 68. In this example, Standard Life found that someone who saw 5 percent salary growth but retired at 58 could end up with a pension pot of £176,000 adjusted for inflation. This is £34,000 less than someone earning 3.5 percent salary growth who retires at 68.
“Scrolling through #corporatelife, you’d think the office was all rooftop drinks, Matcha runs and oddly satisfying spreadsheets,” said Dean Butler, managing director for Retail Direct at Standard Life. “Behind the viral posts, there’s a real conversation happening about how younger generations are adapting to the post-pandemic workplace as some employers reduce working from home, and how they are balancing career ambitions with a desire to prioritise personal health and wellbeing. It might be a long way off, but different approaches have the potential to impact Gen Z’s retirement savings, too.
“Some people are fully ‘locked in’, focusing on the task at hand with ambition for quick salary growth and promotions. Others are putting emphasis on their life outside of work and perhaps avoiding management responsibilities or additional tasks. Neither approach is right or wrong and either could end up with a fulfilling career and a decent pension – it’s worth noting that if someone ‘locks in’ too hard now and burns themselves out by the age of 40, their long-term financial prospects will take a hit. However, choices made now can have a surprisingly significant impact further down the line. The ideal scenario must be to find a work/life balance that works for you while keeping an eye on your financial future.”
