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Worrying about saving for retirement is more common than you may think

Determining how much you need to save for the retirement you want can be difficult enough without actually having to save the money. Your requirements and desires will change over time in the same way that your income is likely to fluctuate.

You can’t be expected to know exactly what you’ll need in 5 years time, let alone 20 or 30, depending on where you are in your journey towards retirement 

As we’ve seen from the events of 2020, even the safest predictions can be subject to unexpected outcomes. It appears that this uncertainty is reflected in the minds of savers, according to Schroders 2020 Global Investor Study.

The study is an independent survey of over 23,000 investors from 32 different locations globally, and responses were collected between 30th April and 15th June 2020. The study suggests that 41% of investors across the world fear that they will not have enough savings to fund their retirement. The time at which the survey took place may be a factor itself as to why some respondents feared a savings shortfall. Whilst responses were being collected the Coronavirus pandemic was in full swing, subsequently upheaving previously held notions of job security and general stability. There were, however, specific answers within the survey which point to more definite reasons as to why people are worried about their retirement savings.

When asked if they believe that the state provided pension in their country was not enough to live off, 55% agreed. In fact, only 19% thought that it was sufficient. 

This view can likely be attributed in no small part to constantly shifting pension rules, which leave many expectant retirees stumped as to what they should prepare for. In fact, 41% of investors agreed that the adapting of rules by governments led them to the conclusion of not seeing the point in trying to save specifically for their retirement. 

Having a plan can be helpful. If you have any concerns about your own pension or retirement savings, you may benefit from seeking the advice of a professional. 

Sources
https://dfm.moneymarketing.co.uk/posts/savings-shortfall-41-worry-they-won-t-have-enough-to-retire

Generation X is failing to save for their pensions

With rising costs of living affecting the way we live our lives, it seems that pensions have taken a back seat for some. Workers in their forties and fifties from generation X have left the organisation of their pension to the last minute, with many savers now pouring money into their pots, trying to make up for lost time.

According to a study carried out by Salisbury House Wealth (SHW), Gen X accounted for 43% of all UK pensions savings in 2018. This marks a dramatic surge in savings, increasing by 14% from the previous year, making up £3.7bn of the £8.5bn saved during the course of the year.

Tim Holmes, managing director of SHW, said: ‘Many individuals in generation X are finding their incomes squeezed by having to pay for both younger and older dependents. As a result, pensions will likely only become a priority at the last minute.’ Tim later goes on to point out that although it may seem wise to leave saving to a later date, your investments may not have enough time to grow.

This seems to link with the white paper produced by the Financial Conduct Authority (FCA) earlier in May on intergenerational differences. The paper noted that between 2014 and 2016, people aged 40 to 50 had less total wealth when compared with people of the same age 10 years earlier. The FCA has suggested that an open debate is required in order to understand the specific challenges that these particular age groups face.

Older people are living longer as life expectancy increases. Baby boomers are having to develop new financial strategies to maintain living standards in later life whereas younger people are struggling to build wealth due to rising house prices, insecure employment and student debt.

The FCA points out that Gen X are likely to be financially stretched, as they are torn between the responsibility of helping older generations in later life whilst also providing financial support for younger generations, leaving less money that can be set aside for their pensions.

Christoper Woolard, executive director of strategy and competition at the FCA, says that from ‘baby-boomers to generation X to millenials – everyone’s financial needs and circumstances are evolving. It is clear that each generation will have its own challenges.’ He goes on to say that now is the time to ‘step back, consider and understand how these needs are evolving and challenge assumptions about customer needs in the context of intergenerational factors.’