Majority of adults are not confident they’ll have enough money in retirement
New research from Nucleus’s Retirement Confidence Index has revealed that the majority of adults are not confident they will have enough money to live comfortably in retirement
More than 4,300 people aged 18 and above took part in the recent YouGov research looking at retirement confidence levels.
A total of 60% said they are not confident about their retirement prospects. Just over a third (34%) of respondents felt they would have enough money to live comfortably for the rest of their lives, while 6% admitted they are not sure what their financial future could look like at all.
The report highlighted that 22% of adults think they will need between £20,000 and £30,000 a year for a comfortable retirement. This would fall significantly short of the PLSA’s definition of ‘comfortable’, which estimates an individual would require an income of £43,100 to achieve the desired lifestyle.
For many, people the figure is likely to be made up of the state pension, private pension and other forms of savings and investment. But just under half (44%) of respondents to the Nucleus study believe the state pension will not exist in the future, while 39% said they are not contributing to their pension provision.
With so much speculation and concern surrounding the 2024 Autumn Budget, Nucleus also took the pulse of the public shortly after the announcement to see how retirement confidence levels were impacted.
An additional 2,100 people took part in this research, with just over a quarter (26%) suggesting they were either slightly less or much less confident about their financial planning retirement prospects.
None of the respondents surveyed were feeling much more confident after the Budget announcement and only 2% said they were feeling slightly more confident.
In November 2023, Nucleus launched its first UK Retirement Confidence Index and adults aged 50 plus had a confidence score of 6.9 out of 10 with a negative outlook. Now in its second year, the research has been expanded to a wider age demographic and larger sample size to provide a fuller picture of retirement confidence in all UK adults.
Based on responses to the same central question of how confident people feel about having enough money to live on for the rest of their lives, the updated results reveal an overall confidence score of 4.6 out of 10. Concerns about what constitutes ‘enough’ are far from being limited to those in or approaching retirement. Understandably those with a longer time horizon until they retire may have other worries about their financial future, amid so much uncertainty.
It is one of the reasons Nucleus continues to call for an independent long-term savings commission. The firm believes there needs to be greater cross-party agreement for pension and savings policy to ensure more people can feel confident about their retirement prospects.
The PLSA’s Retirement Living Standards (RLS) assume people would be mortgage (or rent) free by retirement. Nucleus’ research suggests many do not share the same view with 28% citing rent and mortgage payments as one of the main reasons preventing them from saving more into a workplace or private pension.
High house prices, delayed ownership and other financial challenges may significantly impact the chances of future retirees owning their property outright. The assumption that most retirees have no housing costs is one which may well have to change.
It is also worth noting that the RLS does not factor in other costs such as social care or any tax on pension income and therefore people may have to consider additional expenditure when planning for their retirement.
Other factors preventing people from saving more for later life, include paying off debt (18%) and saving to start/support a family (10%).
Saving to get on the property ladder, student loan deductions, nursery fees and childcare costs are some of the additional immediate concerns for respondents.
Andrew Tully, Technical Services Director at Nucleus, said “Broadening our study for this year’s Retirement Confidence Index has shone a light on the challenges different generations face when it comes to feeling confident about their financial future.
“One message that comes through loud and clear from our findings is that people need to start planning and saving for later life much, much earlier. It’s certainly what our over-50s would tell their younger selves and hopefully what they are telling their children and grandchildren.
“But while the desire is there, many people don’t seem to know where to begin and are finding it difficult to think about the longer-term when they have other more immediate problems to contend with.
“Part of that is due to a lack of understanding, which shows a real need for better financial education to put adults on a good footing. Those who do feel more confident about being able to enjoy a comfortable retirement stress the importance of having a plan and seeking quality financial advice.
“The road to a financially secure retirement is paved by making the right choices at the right times. We need to help lay the foundations, so people are ready to take the first step.
“With people potentially underestimating how much they will need, not appreciating how long they might need it for and not saving anywhere near enough, future retirees could be facing a perfect storm. It’s in all our interests to get the message out there: when it comes to retirement planning, if you didn’t start yesterday, then today is the next best
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How we can help
Here at Logic Wealth Planning we recommend that people need to start planning and saving for later life much earlier. That’s what our over 50s would advise their younger selves and we hope that’s what they’re telling their children and grandchildren.
But knowing when and where to start isn’t easy, especially if you have a lot of other more immediate expenses in your life to deal with.
However the sooner you can take that step the better and that’s where we come in. By understanding more about your current circumstances snd learning about your short term and long term plans, we can help you understand the options available which will help you plan secure, happy, stress free and affordable retirement years. To start the ball rolling why not get in touch and we can arrange to meet with you. Call us on 0808 123 4321. The meeting will be at our expense and without obligation.
Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.