Last night I was watching a report on ITV London news. A reporter was interviewing teenagers at a North London secondary school on whether they have started thinking about their financial future. He asked if any of them had a pension – they all said no of course. He then asked have they started thinking about their financial futures and again it fell on deaf ears.
This behaviour is expected amongst teenagers. 16 years olds have far more pressing issues in life than to worry about their pension. Keeping up with homework, maintaining their social status and thinking about how to pay for uni are the things they care about.
But what’s the excuse for the rest of us who should know better? A report by Royal London suggests that Londoners could be working into the 80s to maintain their current standard of living. Now I don’t know about you, but I have no intention of working beyond my mid-50s let alone up to 80 – sorry OMD UK.
So how fiscally fit are we as a nation? OMD Insight ran some proprietary research to find out. Amongst a sample of 1,476 UK adults we found that 45% of us have a private pension and 49% have an ISA – so for at least half of us we are planning for a more comfortable future.
The current government work place pension scheme will help those who are financially disorganised plan for their retirement, but this is too late for the reported one in seven who are retiring this year with no personal pension savings.
With household budgets already stretched, 29% of our respondents told us that the main reason they are currently not paying into a private pension is because they don’t have enough spare money to invest in one and 12% have never really thought about it.
Worryingly, 16% think (or rather hope) that the state pension will be enough to live on when they retire. At only £6,029 a year (or £115.95 a week) the basic state pension won’t pay for much, placing greater strain on the welfare sector, charities and families to fill the gap.
With the state retirement age increasing to 66 from 2020 and then to 67 between 2026 to 2028, and then linked to life expectancy after that I would not like to wait until I’m possibly in my 70s or even 80s to start receiving one.
According to our survey, only 38% of us feel happy with our finances right now, so many are simply pushing the issue of their financial future to one side. We asked our respondents if they were given £10,000 right now to invest in their financial future what would they do. A whopping 46% would invest it into an ISA – easily accessible if needed and low risk. Only 21% would invest some of it into a pension.
For many, retirement is just a long way away to spend time worrying about. But just by simply writing this blog I’ve come to the realisation that will my pension pot be enough to retire on by my mid-50s?
Source: OMD UK Insight. Nationally representative sample of UK adults, run from 22nd February to 24th February 2016. Total sample is 1,476.