A couple of recent surveys by Scottish Widows are quite revealing about the nation’s psyche as well as behaviour when it comes to financial matters in general – and retirement in particular.
Research for Scottish Widows, carried out by One-Poll in December 2013 and January 2014, looked into the long-term worries of the nation. This suggested that the things we worry about most are also the things we tend to put off planning for.
For example, the survey found that worrying whether we’ll have enough to live on after retirement was fourth on the worry list but saving for retirement was joint second on the list of our delayed plans. So most people worry about their future pension income but don’t do anything about it.
When asked how far in advance people start planning their financial future, the survey found that 39% of people admit to worrying about whether they’ll have enough to live on after retirement, but only 20% worry about whether they should actually be contributing to a pension.
Equally concerning is that only 26% would consider planning for retirement 20 years ahead of time. Yet an earlier survey by Scottish Widows found that the average British worker anticipates stopping work around age 66 and is looking for retirement income of £25,000 a year. That would require savings of £1,000 a month from age 30 – or 36 years. Go figure!
This research survey was carried out for Scottish Widows by YouGov between 25 February and 4 March 2013. It showed that someone earning £25,000 and saving at a 12% level would be likely to see a fall of over 50% in their income after retirement.
However, it also showed that starting to save at age 20 rather than 30 could add 39% to retirement income. Deferring retirement from 65 to 70 could add 43%, whilst increasing contributions by 3% of earnings every five years could add 68%.
Overall, the survey found that whilst more people are saving for their retirement than in recent years, fewer are saving enough to provide a satisfactory income level. The gender gap between men and women remains disconcertingly high, with 9% fewer women saving adequately.
So the message is clear. People need to start saving for retirement earlier. They also need to save more. This requires proper financial planning so they can aim for the lifestyle they aspire to in retirement. Then there will be less need to worry and more chance of being happy!