Number of people saving for retirement reaches all-time low

The number of people saving for their retirement in the UK has dropped to an all-time low, according to a new report by pensions and investments firm …

The number of people saving for their retirement in the UK has dropped to an all-time low, according to a new report by pensions and investments firm Scottish Widows.

Less than half (45 per cent) of those who should be preparing for their older years – those aged 30 or over and earning at least £10,000 a year – are not doing so.

In the study – which surveyed 5,200 UK adults – one-fifth of people admitted to not saving anything at all for their retirement, while more than a third revealed they are not saving enough.

The annual income people would feel comfortable living on at 70 years old has also increase over the last year, with the findings revealing it is now £25,200 – up from £24,500 in 2012.

Based on this year's average savings levels, people retiring at 65 could receive less than half the amount they feel they need. The total pot for an average saver would stant at £122,000, which would provide an annual pension of £3,860. With the addition of the state pension this would produce a yearly income of around £11,400, which is significantly less than the £25,200 individuals believe they need.

Worryingly, the research also found people are entering retirement owing large amounts of money, including loans, mortgages and credit card debt. Almost 5.3 million (24 per cent) of people aged over 50 have a mortgage, a quarter are lumbered with credit card debt and one in ten (eight per cent) have an unsecured loan. 

Of those who have already retired, a third (32 per cent) are still paying off debts and excluding mortgage debt, the average amount owed is £5,682.

Ian Naismith, pensions expert at Scottish Widows, said: "We are being hit with a triple-whammy of, firstly, continued economic uncertainty making it difficult to save for the long-term; secondly the age of first-time buyers rising as we face troubles getting on the property ladder and thirdly an ageing population."

Mr Naismith believes these three factors are creating a "perfect storm" for those heading towards retirement.

By Joe White

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