Putting money aside for the future is one of the most fundamental principles of good financial planning. But with inflation at a 30-year high, and set to rise even further over the coming months, countless families and households are struggling to pay the bills and put food on the table.
As a result, the idea of saving money for retirement is far from being their priority, as their overriding focus is simply on surviving through the next few days, weeks and months. It’s no surprise then that many people on lower incomes are worried they won’t have enough to live on when they retire.
According to research by the Pensions and Lifetime Savings Association (PLSA), 35 percent of low-income households, those who earn up to £14,000 a year, believe their current pension saving won’t be enough to get by on in the future. Some 31 percent of those who earned between £14,000 and £28,000 were similarly concerned, along with 20 percent of households with a total income of more than £48,000.
The findings suggest that the cost of living crisis could have huge long-term repercussions, as many lower-income households may end up without the pension income they need in the future to enjoy a decent standard of living in retirement.
Younger adults concerned about retirement income
Overall, 26 percent of people with a workplace pension said they believe they won’t have enough to live off when they stop working. But worryingly, the extent of this feeling varied between different age groups.
For example, 29 percent of 35 to 54-year-olds said they were concerned about their retirement income, compared with just 20 percent of over-55s. Similarly, there was a split between men and women, with 31 percent of women expressing concern, compared with just 21 percent of men.
What do people want from their retirement?
Of course, people’s level of concern about their future retirement income will depend partly on what they want and expect to get out of life when they finish work. Some 21 percent of those polled by the PLSA said they want a pension that meets all their basic needs after they retire. However, 41 percent said they want their pension to not only meet their basic needs, but also let them do some of the things they’d like to do in later life.
Meanwhile, 33 percent said they want a pension that covers their basic needs and allows them to do most of what they want to do in retirement. This is no surprise, as people want to be able to do more than simply make ends meet. Every person will have different circumstances, priorities and aspirations, and will want to be able to do what’s important to them without suffering financially.
Figures from the PLSA also showed that while 41 percent save to enjoy a moderate living standard in retirement, just 27 percent think they’ll achieve it. Similarly, 33 percent said although they’re saving to enjoy a comfortable living standard in the future, only 14 percent think it’s achievable.
The gap between people’s hopes and the reality of their situation is a real concern, which is why we’d strongly encourage pension savers to speak to a Financial Planner/Adviser like ourselves. We can work with you to create a bespoke financial plan, based around your unique needs, circumstances and lifestyle objectives. With that in place, you’ll be in a stronger position to get yourself on a more solid financial footing and be confident you’re taking the steps necessary to enjoy your retirement when it comes.
