Nearly a quarter of Brits believe they will never be financially secure enough to retire
As many as 6.3m people (one in five of the workforce) either have no knowledge of pensions, do not know if they are saving enough money to fund their retirement in other ways or how much any current pensions are worth.
And 6.9m (21.8 per cent) believe they will never be financially secure enough to retire, found new research published today.
The self-employed are particularly at risk with 46 per cent admitting they will not be able to afford to stop working at 65 - compared with just 19 per cent of those working for others.
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Now experts are warning of a growing divide between those workers who do involve themselves with pension planning and expect to retire in comfort and those who ignore the issue and will not have saved enough money.
Tom Conner, a director at adviser Drewberry, which commissioned the report, said: “Too few savers have come to terms with the fact that the onus now lies on the individual to save for their retirement.
“It’s clear the UK still has a long way to go if it is to improve the outlook for those reaching retirement in the next decade or two.
Spiralling property value have created a false sense of affluence
The high cost of living might mean they don’t have enough spare money
Steve Wilkie of Responsible Life
“Unlike previous generations, we have become a nation that’s unwilling to save toward the future cost of retirement or to pay for the advice that most of us will need in order to build a successful retirement portfolio.”
Steve Wilkie, managing director of retirement specialists Responsible Life, added:
“Millions of people are facing a very depressing, hand-to-mouth retirement, after working hard for 30-40 years.
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“People are simply not saving enough. That could be because they are apathetic about saving for retirement, or don’t really know how much they should be saving.
“More education and engagement is needed as there’s a worrying chasm between how much people think they need to have a comfortable retirement, and what they actually need.
“For many, the high cost of living might mean they don’t have enough spare money to put aside each month.
Nearly half of self-employed people say they won't be able to retire at 65
“Whatever the reason, it’s important to address the problem, and not bury your head in the sand.”
More than a fifth (22 per cent) of employees believe they will never be financially secure enough to stop working, according to the company’s latest annual survey of 2,000 people.
Almost one in three workers believe saving up to five per cent of salary into a pension is enough to fund their retirement, while 40 per cent admit they are just relying on money they have in the bank.
Despite interest rates at a record low, cash ISAs remain over three times as popular as stocks and shares ISAs, and almost a quarter (24 per cent) expect their property to help subsidise their retirement.
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Eight per cent of respondents stated that buy-to-let investment would deliver additional income in retirement but twice as many thought the equity in their home would do the same thing.
But Mr Conner said: “This is probably one of this year’s most worrying findings.We think that spiralling property values have created a false sense of affluence for many UK homeowners.
“While it’s true that their biggest asset is now worth more than it once was, their home is an illiquid asset as well as their main residence.
Steve Wilkie believes Brits need more education on how to save for retirement
“Based on average UK property prices a retired couple in a position to sell the family home and ‘downsize’ will be lucky to clear £100,000 after stamp duty, transaction fees and moving costs.
“With today’s annuity rates this equates to a measly, RPI index-linked income of around £2,500 a year. This isn’t much to show for two people.”
The views expressed by the self-employed survey participants were especially troubling.
According to the findings, only 27.7 per cent of sole traders thought they would be able to retire by age 65.
The poll also examined a number of other emerging trends among UK workers.
It found that UK savers are far too slow to adapt to changing financial circ*mstances with more than half of respondents still using bank accounts to build their savings despite interest rates at just 0.25 per cent.
Some 44 per cent still have cash ISAs even though the combination of ultra-low interest rates and the new tax allowances for earned interest have made them all but redundant for most.
Only 13 per cent claimed to have a stocks and shares ISA despite the fact that they are far better positioned for long-term growth.
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