A recent review of the UK’s retirement landscape by one of the world’s largest investment managers, BlackRock, has raised questions about retirement readiness.
The work was based on a survey of 1,000 savers in defined contribution (DC) pension arrangements – the type which now dominates private sector retirement provision, mainly through automatic enrolment workplace schemes.
There were 4 main findings from BlackRock’s survey:
- Generational differences in retirement readinessOnly Gen X (born 1965 to 1980) and pre-retirees are able to prioritise retirement saving. In contrast, Gen Z (born 1997 to 2013) were more concerned about enjoying life today than planning for the future. The previous generation, Millennials (born 1981 to 1996), felt unable to make any plans due to their current financial pressures.
- Staying on track is a concernWhen asked 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, 50% said that they could not afford to save enough and 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 essentialFour out of five people 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 conundrumOver three-quarters of pre-retirees do not have a plan to move their money out of their workplace pension upon retirement. And even amongst those who say they have a plan, many have not given much thought to how they will generate income in retirement.
Do any of these survey responses ring a worrying bell with you? If so, it could be time to review your retirement planning now.
The above was provided by Hartey Wealth Management Limited. Registered office: Hilliards Court, Chester Business Park, Chester, CH4 9QP.
Tel: 0808 168 5866. www.harteywm.co.uk
Hartey Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority
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