Royal London: Shock-people not saving enough

Royal London have published research into retirement savings in the UK. Here we look at some of the key findings.

State pension

40% of 30-40 year olds not saving for retirement say they will rely on the state pension at retirement, however:

46% say they could not live off the current state pension in retirement
40% of all 30 - 40 year olds stated that they think that it is 'somewhat unlikely or 'very unlikely' for the state pension to be in existence in 2050.

Spending

Today’s retirees spend £1,084 per month on essentials (commodity/services, fuel & power, transport, housing and food)
According to the Centre for Economics and Business Research's (CeBR), this is set to increase to £2,930 per month, or £35,500 p.a., by 2050, an increase of 148%
Only 8% of those in their 30s expect to need their pension for 30 years or more.

Current savings

The median sum saved for retirement by those under the age of 30 with a pension is £6,000
This rises to only £14,000 for those in their 30s
Only 15% of 18-40s think they are on track and saved enough for retirement
Of these 25% currently have less than £20k saved in their pension.

Solution

84% of 18-40s surveyed said that a 3rd party incentive, such as a £1 top up for every £2 they saved would make them save more
33% of people in their 30's have taken professional advice from a financial adviser
24% of those aged 35-40 said a financial adviser is their main source of advice.

Conclusions

The research shows that many people underestimate how much they will need in retirement, and how long for.

Advisers can make a difference by helping clients to identify:

Their likely income needs, based on current spending rather than a single fund value
The age at which they would like to start taking income and how long it may be needed for
The shortfall in their current savings if this objective is be achieved

And, most importantly.

Checking on a regular basis if they are on track and making adjustments as necessary.

Further information

The full report was published on 30 September 2015.
Read a press release about the research issued by Royal London on 30 September 2015.
Research was carried out by Harris Interactive UK Ltd between 14 August and 19 August 2015:
- Survey of 3,060 UK adults aged: 18 – 29 (741 respondents); 30 – 40 (1,186 respondents) and 65 – 75 (1,133 respondents).
- All 18 – 40 year olds interviewed were in paid employment.
- Data weighted on age, gender and region to reflect the working population aged 18 – 40 and the general population aged 65 – 75.

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