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With young people desperately saving to get onto the property ladder it is hardly surprising that 59% of twenty-somethings have no plans to save for retirement – in spite of the fact that a third of those now retiring face low incomes and one in five is having to work part time to supplement their pensions.
Despite warnings from the government over the pensions gap, and the plan to raise the state retirement age, the UK’s twenty-somethings are still not aware of the dangers of planning too late for their retirement.Comparing young people’s attitudes towards retirement against the reality of those now facing it, reveals that four in ten people aged 18-24 (39%) say they plan to worry about how to fund their retirement ‘nearer the time’. One in five (20%) people in this age group say they are hoping to inherit money from family at some point as their main means of supporting themselves in retirement. Put together, this represents 59% of respondents who have no plans to save for retirement.Yet nearly a third (27% - equivalent to 4.5 million based on national population data) of over-55 year olds say their pension funds are so short that they are unlikely to be able to support themselves in retirement. Almost one in five over-55 year olds (18%) feel they will have to work part-time in retirement, with a quarter (25%) saying they will probably need to release equity from their homes during retirement as a means of financial support.Lack of planning appears to be the consistent barrier to pension provision, with the majority (23%) of those aged over 55 revealing they began saving for their retirement between the ages of 41 and 50 – leaving barely any time to save properly. But clearly with the average wage still only around £24,000 a year, vast numbers of individuals have no disposable income to save. Most are paying off a large mortgage and supporting a family until well into their fifties.
Despite warnings from the government over the pensions gap, and the plan to raise the state retirement age, the UK’s twenty-somethings are still not aware of the dangers of planning too late for their retirement.Comparing young people’s attitudes towards retirement against the reality of those now facing it, reveals that four in ten people aged 18-24 (39%) say they plan to worry about how to fund their retirement ‘nearer the time’. One in five (20%) people in this age group say they are hoping to inherit money from family at some point as their main means of supporting themselves in retirement. Put together, this represents 59% of respondents who have no plans to save for retirement.Yet nearly a third (27% - equivalent to 4.5 million based on national population data) of over-55 year olds say their pension funds are so short that they are unlikely to be able to support themselves in retirement. Almost one in five over-55 year olds (18%) feel they will have to work part-time in retirement, with a quarter (25%) saying they will probably need to release equity from their homes during retirement as a means of financial support.Lack of planning appears to be the consistent barrier to pension provision, with the majority (23%) of those aged over 55 revealing they began saving for their retirement between the ages of 41 and 50 – leaving barely any time to save properly. But clearly with the average wage still only around £24,000 a year, vast numbers of individuals have no disposable income to save. Most are paying off a large mortgage and supporting a family until well into their fifties.
With the young not learning from the mistakes of the older generations and not making adequate preparations for their retirement, the current pensions crisis looks set too continue indefinitely.
If younger generations were to give more consideration to their future needs they could easily avoid an uncomfortable retirement. It is also clear from the research that those reaching retirement would benefit from professional financial advice in order to maximise their income.There are often many options left open to people which are not considered, for example many people are not aware that they are able to increase the income they receive from an annuity because of bad health or lifestyle choices; equity release is also a viable option for many but is often not known to the retiree.