• Research has highlighted serious gaps in Brit’s knowledge when it comes to planning for later life.
• Key findings include a third of Brits unaware of their retirement age, only 1 in 5 confident they will have enough equity to survive in retirement, and 1 in 5 admitting they have no future financial plans.
• With 60% admitting they may need independent financial advice but find it too costly, could we be heading towards a later-life crisis?
Research, conducted following the worst of the financial impact of the pandemic, has revealed shocking statistics around Brits’ understanding of the planning required for later life. As Britons face a later retirement age, increasing living costs and a potential future recession following the impact of Covid-19, the response to the survey has identified a greater need for financial education, in all ages across society.
The research, conducted by Saffron Building Society, as part of its ‘It’s more than money’ campaign, surveyed 2,000 Brits of various ages to get a snapshot of the financial wellbeing of society – looking specifically at the planning for later life, prior to and post-retirement. Considering various later-life situations, some of the findings were quite a surprise.
One-third of Brits researched admitted to not knowing that age in which they are expected to retire, according to UK government data. This key milestone is important to ensure concrete decisions can be made when considering savings, investments, and pension contributions. With only one in five feeling confident they will have enough equity to survive when the end of their working life arrives, a quarter admit that they don’t have any savings goals or future plans that will provide enough financial security for retirement.
John Penberthy-Smith, Chief Commercial Officer at Saffron Building Society, who commissioned the survey comments: “The pandemic may have exasperated it, but we have known for some time that Brit’s understanding of the importance of later-life planning has always been very low. We have faced increases in the cost of living for decades with income finding it hard to stay with the trend, leading to many finding it difficult to save. The knock-on effect of a drop in savings, especially in lower-income couples and families, then leads to less consideration for later-life financial planning which is very evident from the responses to our survey. Life’s milestones, such as owning our first home, provide some financial security for the future, but there is evidently still a knowledge gap – in all age groups – about the importance of planning for the future.”
Later-life planning is not just about having enough money for retirement but setting plans and wishes for life’s emergencies so that family and loved ones know your wishes around how your finances are managed when you die. As part of the study, the society found that half of Brits (across all age groups) did not understand the need for a will and testament, and over half (56%) did not understand the phrase ‘Power of Attorney’. With one in five having never discussed their financial future with their family or loved ones, there is a real issue that should they die, their wishes will not be understood or actioned.
John continues: “A big part of growing older is looking forward to retirement. The ability to enjoy retirement is knowing all your ducks are in a row and that you can live comfortably with the income of your pension, savings, investments, and any additional income.
However, from what we already know and what we have learned from the insight from the research, is that individuals and couples could be facing a more stressful retirement. Planning for later life should start from your first job, and your first workplace pension and be continually managed through all aspects of life. Buying a home, having children, and moving jobs are all stressful but important pillars in life, and will all affect how we finance our life in old age. So, understanding, reviewing, and continually educating ourselves around our financial future will ensure our retirement is stress-free, and those around us know our wishes should life throw up a curveball.”
With over three quarters (76%) of those surveyed feel that independent financial advice would not be right for them as they don’t earn enough, and 60% admitting they may not be able to plan for retirement without financial advice, John says there are other options.
“Independent financial advice doesn’t have to cost the earth, and plenty you can get for free from your current bank or building society. As part of our ‘It’s more than money’ campaign, Saffron has launched free financial wellbeing calls with our experienced team and are working with partners to provide support in estate planning, wills, pension, investments and so much more to ensure our members have access to everything they need to plan for the retirement that they have earned and deserve. No matter what age, your planning needs to start now.”
To find out more about the It’s More than Money campaign with Saffron Building Society, or to find exclusive financial wellbeing tips, visit www.saffronbs.co.uk.