80 per cent of people not saving enough for retirement
As much as 80 per cent of working age people, who started seeking financial advice from deVere last year, were not saving enough for their retirement.
These are highly concerning stats.
In 2016, just 20 per cent of these clients were saving enough to reach their financial goals in later life, to ensure their pension pots would last throughout their retirement.
As I was quoted as saying in BBC News, The Express, Global Banking and Finance Review, Business and Finance, Fintech Finance, Pensions Age and Age Times, amongst others, whilst the ‘live for today’ attitude that is adopted by many can be commended in many respects, when ‘tomorrow’ does arrive, not planning adequately for retirement can result in disastrous consequences.
This is chiefly because we’re all living longer now, meaning retirement funds have to last longer; it’s unlikely that governments will be able to support the older generation as has been the case in previous years; the threatening health and social care crisis; and, of course, escalating deficits in company pension schemes.
Furthermore, people may not be able to work for a longer period if necessary, perhaps due to a long-term illness or a lack of available career opportunities.
As such, there needs to be a major shift in the savings culture. If not, many of the working population today could find themselves at retirement age with insufficient funds, forcing them to downgrade their lifestyle, or having to work longer than they would like.
Therefore, with regards to how much income should be allocated to saving for retirement, it will depend on the age the person started saving, amongst other factors.
That said, in general terms we typically suggest those between the ages of 25 and 34 should save between 15 and 25 per cent of their income; for those between 35 and 44, the amount should rise to 25 to 35 per cent; the 45 to 54 age bracket should be putting aside 34-45 per cent; and the over-55s would need to save a considerable amount more, depending on the exact age of the person, and their personal and professional circumstances.
As such, in order to stimulate the culture of saving, a ‘joined-up thinking’ approach is required. Indeed, it is in everyone’s interest that the ageing population is more solvent.
Multi-media campaigns should be undertaken by the government to encourage saving. Although this will cost time and money, the cost to the State of having to support an increasingly large number of the population in their retirement would cost far more, whilst at the same time encumber sustainable economic growth over the long term.
Moreover, the financial advisory industry must also play its part in restoring people’s confidence in the wider financial services sector. They will then be more likely to take action and seek professional financial advice, which will significantly increase their chances of securing financial freedom in retirement.
Consequently, the time to start saving is now. This is the message we need to get across! The earlier people begin putting money aside, the more straightforward it will be to reach long-term retirement goals. It’s never too late to start, and there are numerous financial solutions available to help reach, often exceed, these objectives.