Retirement expectations of consumers fall short
10 April 2018
Over a quarter of consumers under the age of 45 only expect to retire after the age of 70
14.8% of consumers under the age of 45 worry they’ll never be able to retire
79.5% of those aged between 45 and 64 hope to retire by 65
More than half of respondents knew exactly how much is in their pension pot
Respondents desire for 63% of their current annual income to be their pension income
A new study from moneyfacts.co.uk has shown a shortfall in the expectations of consumers when anticipating retirement income. Some thought they will need to wait until they are over 70 years old before they can retire, while some even believed they never will.
While 75% of respondents aged between 45 and 64 hope to retire between the age of 55 and 65, the same can’t be said for those aged under 45. Our figures show that less than half (39.3%) in this age group hope to retire by then and only 18.5% think it’s possible.
Rachel Springall, Finance Expert at moneyfacts.co.uk, said:
“The changing landscape for pension provision is clearly upending the way consumers think about retirement. Most of the older respondents in our independent survey hope to retire by the age of 65, but very few under the age of 45 share this sentiment. Interestingly, national statistics from the ONS show that only 26% of the adult population in work expect to retire before the age of 65, with the majority (59%) expecting to retire between 65 and 69. This runs counter to the hopes of most survey respondents, regardless of age.
“That said, many younger consumers seem to be realising they can expect a later retirement, or in some cases, worry that they will never truly retire. Our study shows that while only 3.8% of respondents aged between 45 and 64 feel they won’t be able to retire until after the age of 70, more than a quarter (25.9%) of those under the age of 45 feel the same way. Even more concerning is the result that 14.8% of those under the age of 45 don’t expect to retire at all, compared to only 2.6% of those aged 45 to 64.
“With regards to the awareness of saving for retirement, it appears moneyfacts.co.uk users are relatively savvy with keeping tabs on their pension pot, as 55.7% knew how much they have amassed. However, there were still around a third of respondents with only a rough idea of what they had saved (31.3%), while 5.4% hadn’t even started saving for retirement.
“Clearly, not everyone prioritises the need to save towards retirement in the same way, while many may pin too much of their hopes on the state pension. Consumers should make every attempt to save an adequate amount of their income to ensure a more comfortable retirement. If left by the wayside, retirees could find themselves with very little disposable income.
“While auto-enrolment is a welcome step towards saving for retirement, it shouldn’t be assumed that the bare minimum will be sufficient to cover what individuals expect to retire on. According to our survey, consumers hope to retire with a pension pot that can give them 63% of their current level of income. However, they realistically expect to only receive 52% of this. Either way, it will require diligent saving throughout their working lives.
“Consumers should make every effort to prioritise their retirement provisions, particularly if they are getting close to retirement age. Keeping an eye on any investments and/or appointing an independent financial adviser to manage the pot through the years can make all the difference when it comes to realising one’s retirement hopes and expectations.”
The Moneyfacts Survey was conducted between February and March 2018 and surveyed moneyfacts.co.uk customers.
