New research from Aviva into the attitudes of the over 50s towards their pension has uncovered that half (49 per cent) regret not saving into their pension sooner, and almost two thirds (64 per cent) wish they had contributed more into their retirement savings at an earlier stage.
A quarter (26 per cent) of participants in Aviva’s survey stated that they only started paying into their pension after they turned 30 years old, primarily because they did not feel financially stable enough to contribute any sooner (51 per cent). Many, understandably, prioritised raising children (42 per cent) and paying off their mortgages (40 per cent) before putting any surplus cash into their pension. However, a third put leisure / holidays (32 per cent); clothing (21 per cent) and their pets (10 per cent) before their retirement income.
Almost four in 10 (39 per cent) people over the age of 50 believe that an income of between GBP10,000 – GBP20,000 per annum in retirement will be enough to live ‘comfortably’. This is despite figures announced by The Pension and Lifetime Savings Association (PLSA) in October 2021 stating that GBP20,800pa will only provide an individual with a ‘moderate’ standard of living in retirement. To enjoy a ‘comfortable’ standard of living the PLSA suggests this would increase to GBP33,600 per year.
A quarter (24 per cent) of those aged over 50 believe that a personal contribution of between 0-5 per cent of their salary is an ‘appropriate and achievable’ level to attain a savings pot big enough to support them in retirement. This is some way off the 12 per cent target that Aviva believes should be a minimum people need to save to avoid disappointment.
When asked about financial advice, more than 70 per cent of over 50s say they have never sought financial advice regarding their pension. Almost a third (30 per cent) say they feel they know what they are doing and don’t need financial support, 10 per cent say they rely on their family and friends for support and advice. However, after hearing that they could add as much as GBP47,000 to their pension (over a decade) by taking financial advice, half of them say they would.
Alistair McQueen, Head of Savings and Retirement at Aviva says: “Pensions are more important to more of us than ever before. Automatic enrolment has brought pension savings to millions, but this was only introduced a decade ago and for many, especially those over the age of 50, it is perhaps too little, too late.
“Hindsight is a wonderful thing and life in your 20s and 30s can often take over, with children to raise, debts to pay and holidays to be enjoyed. However, it’s important to take stock of your financial situation early. You may not think you have enough spare cash, or that you have years until you retire, but as we found with our survey, most people over the age of fifty (64 per cent) wished that they had paid more into their pension pot, sooner.
“It’s also important that people are realistic about how much they might need to live on in retirement. With more people continuing to pay rent or mortgages after they finish working, it is unlikely that an income of between GBP10,000 – GBP20,000 per year will be sufficient to have a ‘comfortable’ lifestyle. To avoid sleepwalking into retirement it’s important to understand how much you have in your pension, what that money might look like as retirement income and how long you might need that money to last.”