Vast majority of workers unrealistic about retirement savings
8 out of 10 workers underestimate how much they will need to save for retirement according to a recent poll carried out by deVere Group.
From more than 600 potential and new working age clients in the UK, the U.S., Australia, France, South Africa, Hong Kong and the United Arab Emirates, 78 per cent were unaware of how much money they would need to achieve their retirement goals – until they started working with an independent financial adviser.
As I was quoted as saying in International Adviser, Khaleej Times, Money Observer, Mindful Money and theCsuite, amongst other media earlier this week, in recent years it has become increasingly evident that more and more working age individuals understand the crucial need to save for retirement.
They realise that the state will be unable to support them as it has done for past generations, due to an ageing population and shrinking workforce; that living, health and care costs will increase significantly; less generous company pensions; and that we’re all living longer, meaning that accumulated funds need to last longer.
As such, they know that saving for retirement is now a personal responsibility for everyone.
However, what is startling is that the overwhelming majority are unaware of just how much they will need to save. This black hole in something as vital as retirement funding is extremely worrying indeed.
The amount required for retirement is entirely subjective and depends on various factors. This includes an individual’s current age; what age they wish to stop working; retirement aspirations; whether they are due inheritances and current personal financial circumstances, amongst other key issues.
Therefore, in order to discover how much people will need to be saving now and in future years to enjoy their desired retirement, we undertake a comprehensive ‘fact-find’ process based on the information given by the client, along with economic and market analysis.
Nevertheless, this recent poll suggests that despite the amount needed for retirement being a very personal issue, there is one universal theme: before consulting a financial adviser, the vast majority of people – across all incomes, working age brackets and nationalities – underestimate how much they should be putting aside.
As a result, when our advisers initially sit down with new clients to devise a tailor-made financial plan, clients are often surprised when they realise how much they should be saving in order to accomplish their retirement ambitions.
However, even though 78 per cent of those questioned in this survey have unrealistic expectations with regards to retirement savings, they are now in the picture and can start planning seriously for their desired retirement.
It is far preferable to get on the right track as soon as possible, and I would strongly urge people to get informed about their retirement.
Regrettably, not having a robust savings plans will mean many individuals will be forced to work longer than they had hoped, and/or considerably downgrade their retirement aspirations.
By having a well-defined financial plan, people are laying the foundation to enjoy an active, comfortable and secure retirement.