Younger workers are much more thoughtful about money issues than people might expect, and they are saving aggressively to achieve an ambitious retirement according to a new report from Royal London.

The report,Workplace Pensions: Are they working hard enough?, shows that many older workers are coming to terms with the fact they will have to live a more modest and frugal lifestyle in retirement, as they regret not saving more or starting to save earlier in their careers.

This sharp generational divide is clear when looking at how much each age group is putting into their pension pots per month. Workers aged 18-34 are contributing, an average, £274.50 to their pension each month – almost 10% of their wage, based on the UK average salary for that age group, and almost twice as much as older workers.

This age group is also more likely to be taking advantage of employer-matching contributions (51%) compared to those aged 50 and above (38%) and they are more proactive in managing their pots – with only 10% of those aged 18-34 having never checked how much their pensions are worth.

The report says that this suggests younger workers are aware of the challenges people are facing in later life and are keen to avoid similar pitfalls.

Younger workers believe they will need £45,000 a year for a good retirement – more than any other age group predicted – and more than the amount needed for a single person to live a ‘comfortable’ lifestyle in retirement according to the Pension and Lifetime Savings Association.

That is more than needed by a couple to live a ‘moderate’ lifestyle which would grant financial security and flexibility, allow one foreign holiday a year, and even accounts for £1,000 to support family members such as by paying for grandchildren activities, according to the report.

On the other hand, those aged 50 and above expect to need just £25,000 – £35,000 a year but recognise that would result in them having to be more frugal.

Clare Moffat, pensions spokesperson at Royal London, said: “Our research showed the average monthly pension contribution for workers aged 18-34 was £274.50 compared to £149.50 for all the other age groups and there are several things that might have influenced this.

“Contributions vary widely across genders, income, age and if someone works full or part-time. In general, those who are lower paid – often women, older employees and part-time workers – tend to pay less into their pensions and the fact they are paid a lower salary also means less is contributed into their pot from their employers.

“Although a difference in attitude might be one driver for younger workers saving into their pensions more avidly, it could also be that younger workers have lower overall outgoings. For example, if they’re yet to have a family, it might mean they aren’t paying higher costs for larger family sized homes, they won’t be paying childcare costs, nor will they be working reduced hours around childcare needs, meaning they could have more disposable income to channel into their pension pots.”

The report also includes research data around what regrets, if any, people had about their financial decisions. Looking at the responses from all age groups, both retirees and those who had not yet retired, about their biggest financial regrets, almost one-third (31%) wished they’d saved more for retirement or saved into their pension earlier. Pension-related regrets topped the list of wider financial regrets, followed by ‘not getting a better paid job’ and ‘not budgeting more’.

Moffat added: “I have never met anyone who said that they wish they had paid less into their pension. It’s also not surprising that around a third of people from our research wished they’d saved more for retirement, could save more now or had saved into their pension earlier. But it’s never too late.

“Saving early means you benefit from the magic of time, but paying into your pension at any point in your life means that you’ll benefit from tax relief, which is the government top up to your pension. If you’re an employee, then you may also benefit from an employer pension contribution. You could also consider putting more into your pension if you’ve had a pay rise or perhaps you could put any bonus you receive in there, if you don’t immediately need it. If you’ve paid off your mortgage and have more disposable income, perhaps you could pay the equivalent of your old mortgage payments into your pension going forward, if it’s financially possible.”