There have been a few studies recently that have provided some worrying insights into the attitudes of Britain’s young population to planning for their retirement. The figures paint a picture of a generation with surprisingly healthy savings habits, but totally unrealistic expectations about their future financial situation.
The Telegraph recently reported on a survey carried out by asset management company Blackrock, which found that 1 in 3 people aged 25-34 expect to have an annual income of £30k in retirement, despite the fact that only 1 in 10 have actually started paying into a pension!!
A 600k pension pot is what’s needed to retire at 65 and receive a pension of £30k a year. For someone aged 25 today, that means saving £400 every month until they hit retirement age. For someone aged 35 who hasn’t started saving for their retirement, it means putting aside a whopping £750 a month.
The survey did find that 25-34-year-olds are saving almost 20% of their monthly disposable income, which is a higher proportion than any other age group, but 88% of them aren’t putting any of what they’re saving towards their retirement.
Instead, most of the money being set aside will be going towards the purchase of a house, with young people focused on getting on the property ladder rather than worrying about how they’ll fund their lifestyle 30-40 years down the line.
Global financial consultancy the deVere Group recently carried out their own survey, polling 232 retired millionaires to get their take on these competing concerns. 62% believed that getting on the property ladder was ‘important’ to ‘extremely important’, whilst 78% felt that building an adequate retirement income should be a priority.
And investment company Skandia asked 500 professionals in their 50s what financial advice they’d give to younger people. 71% urged those in their 20s to prioritise saving for retirement, with Graham Bentley (head of investment strategy at Skandia) lamenting the “mismatch between what young people believe they will achieve and what they are actually doing to ensure they will have enough funds to support a comfortable retirement.”
With increasing life expectancies and record numbers reaching retirement age in 2012, it looks like working for longer may be the only answer. Commenting on the increasing number of fit and healthy older people, Dr Ros Altman, director general of Saga, has said: “That is very good news as long as we are prepared to take advantage of their talents and that they have prepared for their later life. We know that a lot of people have not necessarily prepared enough but working longer will have to be the answer.”
What do you think? Are you happy with your preparations for retirement and what age do you expect to stop working?
I think those are very similar to stats here in the States. I know it’s something my younger brother is dealing with. Saving more is great, and I applaud it, but it’s also vital to have that long term vision of saving for retirement.
John S @ Frugal Rules recently posted..More Blogging Tips From a Beginner
Absolutely… or even thinking about passive income streams for retirement. As soon as I have built up enough of a passive income stream I will be chasing my dreams! If people got it out their head that retirement is something that you do at 60/65 and instead realised that you can put in the hard work and retire at 30/35/40 etc. then I reckon we would see a different attitude!! 🙂
I am happy with our retirement plan and think we are on the right track. However, I know of so many people who have nothing and they are my age.
Michelle recently posted..$1,175 in Extra Income, Life, Food Weekly Update
Quite scary right?
I don’t think many of the people I know my age have really thought about retirement. I find our generation is more concerned with living in the moment that planning for retirement, though that’s certainly not everyone.
Just tragic that most people cannot find a balance 🙁
I consider myself semi retired already, and don’t plan on working more, or less for a long time. I picture “retirement” just the same, doing what I like and working if and when I want to. Living simply, I am on target 🙂 I have a small French and UK pension but don’t expect much and it won’t probably exist by then. I would rather bet on real estate and personal investments.
Pauline recently posted..Little house in Guatemala, week 4
Pauline… you are pretty much a role model!!! 🙂
I’ll be honest I haven’t really thought about retirement savvy. I focus most my time on chasing my dreams in the present. I figure retirement will work it self out, and if it doesn’t and I have to work till I am old and wrinkly at least I lived my youth to the fullest. That is just my thoughts, but then again I have always been a risk taker.
Stephen S. recently posted..Wednesday’s Weekly Photo
Stephen – NEVER EVER stop chasing your dreams. As soon as I have sorted out my retirement plans and have a substantial passive income… I will be there with you. I sometimes wish I chose to do things the other way round, but hey! I am 100% with you on what you are doing dude! 🙂
Thanks for the encouragement Savvy! Your the Man!
Stephen S. recently posted..Photo Essay: Scotland
When I was in the UK I was paying into my works pension scheme every pay. I was also paying off the mortgage on my second house and paying cash for what I needed. It was tough I’m not going to lie and I wasn’t work in a job that I spent years in University studying for. Honestly I don’t think I was thinking about retirement but since moving to Canada that has all changed. I’m thinking more about what we want to do when we retire, how much money we will need etc. I’m hoping to retire when I’m ready. I can’t really say at this moment as I do love what I do. Don’t get me wrong if I won the lottery I’d be retired before you could say retired but until then I just keep on saving.
Canadianbudgetbinder recently posted..Best Home Renovations-Money Wasted or Money Invested?
Hey Mr CBB – sounds like you were living a life pretty similar to my current one when you were in the UK. I will not be doing this forever.. but putting in the work now will give me endless benefits later in life! 🙂
That said, I will never save at the expense of having a great time – after all, it’s not about the final destination – but the ride! 🙂
I hope to build up passive income through mainly real estate so if my account balances aren’t enough that will supplement. I plan not to work longer though. That would be a last resort.
KIm@Eyesonthedollar recently posted..Does It Make Sense to Pay Off The Mortgage Early?
Kim – we are both on the same page here… property all the way. One thing that is certain is that people will always need somewhere to live!
While I’m happy with what I’m doing personally, I’m definitely not the normal non-retirement-thinking dude. It was scary to see people take everything they know and throw it out the window with a bunch of excuses about “tomorrow” and “later” and “maybe” every day. You’re right: people have to change. Let’s bring them here so you can save them all!
AverageJoe recently posted..Thanksgiving 2012
Hey Joe! I am glad that you think I can change them all!! I will be delighted if I can change even a few…
I’m still in the same boat as Steven – chasing dreams. Although I’ve shifted priorities into saving in general, retirement savings are not on the list. Still struggling to get ahead.
Veronica @ Pelican on Money recently posted..10 High Paying Tech Jobs Without a Degree in 2013
Never stop chasing dreams Veronica!
I’m lucky because in Australia our employers are obligated by law to contribute 9% on top of our salary into our long term retirement account. It can only be accessed over 55, so it’s a long way off.
I’m trying to retire within ten years – before I’m 38. I’m on track to retire in 8 years, or by the time I’m 36.
I’m happy with how I’m tracking, but I’d love to be there already!
James @ Free in Ten Years recently posted..December challenge: save hot water
Hey James! That is a great mandatory requirement. If only other governments would follow suit! Retiring before you are 38 is an amazing target! What passive income streams do you have on the cards?
That is worrisome that so many young people aren’t saving for retirement. It’s the same thing here in the U.S. I often wonder what is going how we are going to support all of these people in decades to come!~
Holly@ClubThrifty recently posted..Things I’d Rather Hire Somebody Else to Do
Absolutely… and this in turn endangers everyone else’s state pension / social security. For me, this reinforces the need to have passive income for retirement.
I am 1 of 3 brothers in my family and I am the only one of us thinking about retirement. My 2 brothers are just planning on inheriting money from my parents – I believe my parents have other ideas though.
Glen @ Monster Piggy Bank recently posted..Meringue with Chocolate Hazelnut Topping
Oh dear!!! They may have a little bit of a surprise coming their way then right?!
Even though retirement is far off for me, it really does scare me especially with all this talk of social security (in the US) not going to be around in my old age. I have started saving for retirement but I def. want to be saving more. I am trying to get my BF on the saving for retirement kick as well.
Debt and the Girl recently posted..Life Updates…
Good for you! I think we all need to diversify our retirement options with multiple passive income streams. Ideally, I want to be earning as much in retirement doing nothing, as I am right now! 🙂
I got behind on saving for retirement due to large credit card debt. I am kicking myself now for putting off the saving. I am behind, but am trying to catch up. I have a long way to go, but at least I have my goals.
Debt Roundup recently posted..3 Online Shopping Tips To Get Better Deals
You are 2/3 of the way there in that you have realised what you need to do! 🙂
I’m pretty concerned that more people around my age aren’t saving for anything, let alone for retirement. We need to get used to the idea that saving a little, but from an earlier age will make everything easier for us later on.
It’s the equivalent of when you come home drunk at night and you fill yourself up a glass of water to drink in the morning to reduce the hangover. Drunk me looks after hungover me.
Well, we need to look after retired me or there will be a hell of a hangover!
Jon recently posted..Should you share finances with your partner?
Hi Jon – Thanks for stopping by! I absolutely LOVE your comparison of drinking water to reduce a hangover… I actually tend to down a few pints when I get in to reduce the effects… Using your analogy I should already be retired and living on a passive income!! 😛
I haven’t started saving for retirement yet, because I’m extremely young, but I plan to start saving at least $500/month by age 25. I want to get out of debt long before that so I’ll only have to focus on one thing at a time.
Jordann @ My Alternate Life recently posted..Minimalist Christmas Decorations
How old are you Jordann?
I don’t know if I will ever stop “working.” I enjoy being productive and adding value and think that I will always do that at some level, maybe just fewer hours of it. With that in mind, I know that I might not feel the same way when I am 75, so we have started putting away so that no matter what, we will have adequate money later on in life.
Deacon @ Well Kept Wallet recently posted..Get Cash Back Using a Debit Card
Absolutely..it would be great to have the opportunity not to work if we didn’t feel like it right?
I do NOT plan to work longer to fund retirement. I plan to save more, make more side money, and be a better investor!
My Money Design recently posted..Cutting Back on Our 403b Plan for More Dividend Paying Stocks
I have to say that I was raised in a family that worked in sales, paid almost exclusively in commissions. I remember my father told me that he would never retire, just change things around. I feel myself much the same way. He taught me to always have more than one way of income, regardless of how well off you are. If you are relying on just a job you could be in trouble. It was then that I discovered side businesses, free lance work, vending machines, rental properties and everything in between. I’m not sure I’ll ever retire either, just change paths.
Youthful Investor recently posted..5 Great Books on Getting Started Investing in Bonds