Revealed: how well (or otherwise) the nation is financially prepared to give up work

27th October 2023 by RetireEasy

Interactive investor, the UK’s second-largest investment platform for private investors, has just published its fifth Great British Retirement Survey, revealing the major concerns and trends amongst those heading towards retirement.

Key findings include:

  • Three-quarters (76%) of the self-employed are paying nothing into a pension, and 38% don’t have a pension at all
  • One in five people under age 40 expect their state pension age to be 75 or over
  • A rising tide of unsecured debt is hitting 39% of UK adults, and it’s impacting retirement contributions
  • 67% of women aged 41-55 believe they will never retire
  • Older and middle-aged people are recognising the generational wealth gap, with 16% of over 40s planning to give a “living inheritance” in the next three years
  • Over half (52%) the nation say they openly talk with family about retirement and savings, up from 47% last year. More people are talking to friends, too.

Other findings were that:

  • The cost-of-living crisis continues to cast a long shadow: it is by far the biggest worry across all age groups, and more than half (57%) cited it as a major financial concern.
  • Running out of money was a major concern for 38% of respondents, dropping to 24% of people of pension age.
  • Not saving enough for retirement was the third-biggest worry among one in four (26%). Anxiety peaked among the 41-to-55 age group – that is, those edging closer to retirement.

Richard Wilson, CEO, interactive investor, says: “Three pressing concerns dominate: the rising cost of living, running out of money, and not saving enough.

“At a policy level, government may need to look again at contribution levels, and while the state pension age is emotive and difficult, regional health inequalities should be part of the conversation.

“Good pension outcomes rely on three things: state pension to provide a basic income, combined with workplace and private pensions, boosted by pension tax relief. To rebuild confidence and energise the nation’s pensions savings, the integrity of those three things remains key.”

The state pension

Middle-aged workers have the bleakest outlook with, only 37% of 41-55 year olds believing the state pension will still exist for today’s young people.

Most think the state pension age will rise significantly, with respondents believing today’s young people will get their state pension at an average age of 71. Most (51%) said it would first apply between the ages of 70 and 74, with 16% thinking it would not become available until the age of 75 or older.

Managing our finances

Many (57%) of respondents reported confidence in their own ability to manage their retirement finances, with older respondents the most confident.

Social media is continuing its rise as a useful source of pension information among the working population: 30% now see social media as a useful information source – up from 26% last year.

The Great British wealth transfer

A tenth of over-40s said they had given a “living inheritance” in the past three years and 15% had among those aged over 65.

Some 16% of respondents over 40 are planning to gift money during the next three years. The most common reasons for having given a living inheritance were to see the benefits during a respondent’s own lifetime (40%), helping with either a deposit on a home (28%) or the rising cost of living (32%).

Inheritance tax and avoiding further taxes at death was a prime motivation among members of the interactive investor community (44% of those who had gifted), as well as wanting to witness the benefits of giving. Some 50% of over-65s have already received an inheritance

But inheritances aren’t significantly moving the dial when it comes to retirement plans. Although 54% of respondents expect to inherit, only 12% say inheritance will form part of their retirement plans.Rising debt levels and pension wealth is suffering

People have more debt and less ability to save into their pensions than last year, with young people and the self-employed particularly struggling. Continuing financial pressure is forcing Britons to take on even more debt (39% versus 36% last year). Of those with unsecured debt, a quarter (24%) say it is impacting their ability to save for retirement compared to 14 last year.

Banking pension wealth

More older workers (55+) are stashing their pension lump sum in their bank account or cash ISA. 39% of those taking a pension tax free lump sum paid it straight into a bank or savings account (up from 33% last year) and 25% are using it to pay off debt, up from 22% last year.

More over-60s are retiring

The silver exodus is gathering pace with 49% of 61–65-year-olds retired today, compared with 45% last year. In addition, the number working full-time has further reduced from 29% to 23%. Some 44% of 55–65-year-olds say their well-being has improved since retirement, compared to 31% of over 65s, while 45% 55–65-year-olds whose well-being has not improved say it is due to money worries, compared to 20% of over 65s

One third (33%) were able to retire early due to savings, followed by 25% final salary pension, 25% partner’s income, 19% defined contribution pension and 14% inheritance.

Mind the gender pension gaps

Women have significantly lower pension provision than men: Women are 14 percentage points less likely to have any pension pots than men (72% of women of working age, compared with 86% of men). They expect £8,000 less in pension income (£17,200, versus men’s expectation of £25,200).

According to the ONS Wealth and Assets Survey, the average amount accumulated by men who have private pension savings by the age of 55 to 64 is £228,200 – 50% higher than that accumulated by the average woman with private pension wealth at the same life stage (£152,600). This is further compounded by the fact that a smaller proportion of women have any private pension wealth at all: 28% of women don’t have a pension pot compared to 18% of men.

A shocking 67% of women aged 41-55 believe they will never retire.


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