New research from financial services provider Sanlam UK has thrown up some alarming statistics about how unprepared many of us are for retirement, and just how much (or little) many of the population know about their retirement finances.
Their latest “What’s Your Number?” report found that more than half of UK adults doubt they’ll be able to put away enough money to retire when they would like to.
Only 12 per cent of under-55s actually have a target for pension pot – and alarmingly, people are four times more likely to know their lottery numbers than what their target pension pot should be to achieve financial security in retirement (11% vs 3%).
“Although planning for retirement is vital for our financial futures,” says the report, “many people appear reluctant to engage with the process. Just 3% of UK adults say their target retirement pot is one of the most important numbers to know.
“Those with more than £100,000 in savings and investments are only slightly more likely to think it’s a good idea to have a target figure.
“Just 12% of people under 55 have set a target for their pension pots, which means around 18 million UK adults are sleepwalking into a retirement nightmare. Without a target, let alone financial advice, there is the potential for significant disappointment in later life.”
Women are particularly vulnerable to entering retirement without sufficient savings. Sanlam’s research “shows that over a quarter of women (26%) say the main barrier to achieving their retirement goals is that they struggle to save enough each month. This compares with 16% of men.”
This is despite the fact that women are likely to need more money in retirement because, on average, they will live four years longer than men.
Held back by the pay gap between the genders, and the fact that many women take time out to raise a family or care for family members, “women are half as likely as men to be ‘very confident’ that they can build up a pension pot that allows them to retire when they want (27% vs 12%).”
As a result, more women are relying on their partner’s savings and investments (16% vs 10% of men), and inheritance (13% vs 8% of men). This equates to 22 million women being without a financial target for their retirement
Other stats in the report show that:
- One in seven (14%) think they will need to work in their later years, rising to one in five (21%) of under 35s
- Nearly one in seven (18%) expect to rely on money tied up in their house
- One in ten of under 35s expect to rely on their children for extra cash
- The UK average desired income in retirement is £34,000, rising to an average of £59,000 for high net worth individuals
Concludes Lisa Lloyd, Sanlam wealth planner: “It’s astonishing that 55% of people are unsure they will achieve the amount they need to have the retirement they want. The pot needed to generate a retirement income of £34,000 per year would be close to £1 million, which is simply unrealistic for most people. It worries me that only 45% of people feel they are on track, and suggests the UK is setting itself up for a damaging fall when the reality of retirement sets in.”
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