5 Things To Know About UK Attitudes To Retirement In 2014
Scottish Widows has published its 2014 retirement report and its findings show that the UK is getting better at retirement planning, but that there is still a lot of progress to be made. We discuss the five most important takeaways from the report.
1. We are saving more
The average saver in 2006 was putting £54 into their pension pot per month.
The situation now, however, couldn’t be more different and we are now seeing average monthly contributions of £130 in 2014! This increase in pensions contributions means that 53% of savers are now saving adequately for their retirement – a figure that is up 8% from last year and which should only go up further with the introduction of automatic enrolment.
Indeed, the new government legislation which requires workers over 22 years old and earning more than £10,000 per year to be automatically offered a pension by their employer should help UK savers feel even more confident about their pension pots by the time they reach retirement.
2. Auto enrolment could cause a self-employment gap
As mentioned, the auto enrolment legislation is great for employees, but for those in self-employment it could see them left even further behind on the savings front.
The Scottish Widows report notes that only 33% of self-employed workers are saving enough for retirement and with auto enrolment not affecting them there is little to suggest that figure will improve sufficiently in the near future.
3. The pensions gender gap is narrowing
Also interesting in the Scottish Widows report is that the percentage of women saving adequately rose by a massive 10% in the year from 2013 to 2014.
Exactly half of women are now saving adequately, while only 40% could say that this time last year and women are quickly catching up with their male counterparts, of whom 55% are currently saving adequately for retirement.
4. Working longer is a realistic possibility
Scottish Widows has worked out that deferring retirement to the age of 70 could increase your pensions pot by two fifths.
Even more interesting is that people seem quite content to work that long. In 2005, only one in five people felt they would be fit enough at state pension age to continue working and would therefore postpone retirement. Jump to 2014 and now one in three would agree with working longer and feel they’d be fit enough to do so. It seems therefore, that working longer is becoming a reality that people are beginning to come to terms with and accept as a fact of life. While working to age 70 is still obviously undesirable, working to 67 is commonly seen as an acceptable age to retire – even if the majority say they would ideally retire at 62.
5. We are starting to save earlier
Five years ago, it was found that most people thought we could begin to save at age 30, while the average now says we will start to think about saving for retirement just after turning 29.
The Scottish Widows report finds that the older we get, the earlier we would recommend saving for retirement – hardly a surprising finding but an important one nonetheless. On average, those under 50 years old thought we could put off retirement saving until after our 30th birthday, with 18-21 year olds reckoning we could wait as long as till 33.
On the other hand, those over 50 would recommend beginning to save at age 28 or younger. The 60-64 year olds asked even suggested saving at age 26, perhaps demonstrating some regret at not having saved sooner.
It does seem that there is an understanding among young people that saving should start sooner rather than later and, once again, auto enrolment can help massively with this as those over 22 will be automatically put in a company pension scheme once they earn enough.
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