A recent survey has raised questions about retirement readiness.
BlackRock, one of the world’s leading investment managers, has unveiled its latest analysis of the UK’s retirement landscape. The report is based on a survey of 1,000 savers participating in defined contribution (DC) pension schemes—now the dominant form of private sector retirement savings, largely driven by automatic enrolment workplace schemes.
BlackRock’s four main findings were:
- Generational differences in retirement readiness. Only Gen X (born 1965–1980) and pre-retirees are able to prioritise saving. In contrast, Gen Z (born 1997–2013) were more concerned about enjoying life today than planning for the future. The previous generation, Millennials (born 1981–1996), felt unable to make any plans due to their current financial pressures.
- Staying on track is a concern. In response to the question ‘Do you think you are on track to allow you to have a reasonable standard of living in retirement?’, just 26% said ‘yes’, with 35% saying no and a worrying 39% in the ‘don’t know’ category – a six-year high. Even among pre-retirees, over a third were unable to give a definitive answer.
When asked for the reason why they felt they were not on track, half said that they could not afford to save enough. A surprising 44% took the view that the State Pension would not be worth much by the time of their retirement, even though State Pensions have been uprated at least in line with prices since 1980.
- Encouraging better savings behaviour is essential. Four-out-of-five agreed that putting money into a pension is the most effective way to save for retirement, while almost two-in-three thought it was the only chance they had of a decent retirement income. However, when the time came to act or to make a decision, 55% did not believe their level of pension contributions was sufficient.
- The later life retirement conundrum. Over three-quarters of pre-retirees do not have a plan to move their money out of their workplace pension upon retirement. Even among those who claim to have a plan, many have not given much thought to how they will generate income in retirement.
If any of these survey responses ring a worrying bell with you, make a point to review your retirement planning now.
The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.
To discuss your financial planning, contact our Sheffield based Financial Advisers on 01142 664 432 or info@smh.group
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