Too little, too late, too cautious – new research reveals most UK adults are woefully unprepared for retirement

07 April 2018
  • 35% of adults are saving nothing towards their retirement
  • Despite this, 52% think people should start saving for their retirement in their 20s
  • Only 12% are saving more than 10% of their salary
  • 43% say their preferred long-term saving method is cash, despite dismal interest rates. This compares to just 11% choosing pensions
  • The top three financial priorities overall are staying out of debt, having a comfortable and secure retirement and regular holidays
  • Top financial priority for millennials is holidays (37%)
  • A secure and comfortable retirement only becomes the top financial priority for those aged 55-64
  • Public are very risk averse with their investments with 83% of women and 67% of men either not prepared to take any risk of losses or describing themselves as cautious

New research into public attitudes towards their finances from wealth manager Tilney paints a worrying picture of the nation’s personal finances, revealing that that over a third (35%) of adults are currently not saving anything whatsoever towards their retirement. This is despite widespread recognition across all age groups that it is important to start saving for retirement as early as possible. The research comes at a time when UK’s savings ratio has slumped to the 2nd lowest level in 20 years at just 4.9p per £1.

Half of those who did not save anything cited lack of money left after their outgoings as the main reason for not preparing for their financial future. Among those who are saving for retirement, the levels committed are well below those required to provide an adequate retirement income, with just 12% of UK adults committing more than 10% of their earnings towards their retirements.

The figures also show that women are saving less than men, with a worrying 71% saving less than 5% into their pension pot each month, compared with 59% of men.

However, the majority of the population (52%) believe that saving towards retirement should start in your 20s. This is most acutely felt among those imminently facing retirement, with 64% of people aged 55-64 believing saving should start in your 20s.

Despite a decade of low interest rates and negative real returns on cash after the impact of inflation, 43% of the population favour cash rather than any form of investment for their long-term savings. This is four times higher than the 11% who cite a pension as their preferred long-term savings method. Just 9% identified Stocks & Shares ISAs as their preferred way of saving for the long-term. This ingrained cautiousness was further evidenced by 29% of who have investments stating that they are “not prepared to make any investment where there is a risk of losses” and a further 46% declaring they are “cautious about risk”. The research reveals big differences in attitudes to risk between men and women, with 83% of women either not prepared to take any risk of losses or describing themselves as cautious about risk, compared to 67% of men responding similarly. The demographic group most comfortable with accepting “significant risks in the search for high returns” are investors in the 25 – 34 year old band.

When asked about financial priorities, staying out of debt was deemed the most important (45%), while having comfortable retirement came in a close second (43%). A comfortable retirement was the most pressing concern for those rapidly approaching it with 61% of over 55s citing this as their greatest concern. However, at the other end of the scale, millennials deemed travelling and going on holidays as the most important thing (37%).

Andy James, head of retirement planning at Tilney, says: “It is clear from the findings that the British public is woefully unprepared for retirement by both not saving enough and being too risk averse to generate the required investment returns to outpace inflation. This is going to cause a huge problem in years to come and is a situation that is exacerbated by the level of debt hanging over many young people like the Sword of Damocles.  

“The ideal rate of retirement saving would be about 12%-15% of your salary. However, as we can see from the research, only 12% of the population is saving more than 10%. Leaving retirement saving until later in life will simply mean having to put aside significantly more each month to catch up to where you need to be. “Pensions auto-enrolment is certainly part of the longer solution to bridging this gap but contribution rates are very low indeed at just 2% this tax year split between employers and employees. In the new tax-year the total contributions will go up to 5%, of which employers must provide at least 2% and the employee must make up the balance. People may not like these increases hitting their monthly disposable income but should think very carefully about the bigger long-term picture before deciding to opt-out and lose their employer’s contribution.”

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About the research

The research was conducted by Opinium for Tilney via an online survey in February 2018. It looked at the financial attitudes of 2,000 nationally representative UK adults (aged 18+).

About Tilney

Tilney is a leading investment and financial planning group that builds on a heritage of more than 180 years.  Our clients are private investors, charities and professional intermediaries who trust us with over £23 billion of their assets. We offer a range of services including financial planning, investment management and advice and, through our Bestinvest service, a leading online platform for those who prefer to manage their own investments.

We have won numerous awards. Tilney has been awarded Best Conventional Advisory Service at the 2018 City of London Wealth Management Awards, Best Advisory Service in the 2015 City of London Wealth Management Awards; Investment Award – Cautious category in the Private Asset Management Awards; and Stockbroker of the Year, Execution-only Stockbroker of the Year and Self-select ISA Provider of the Year 2015, as voted by readers of the Financial Times and Investors Chronicle. Bestinvest was voted Best SIPP Provider and Best Fund Platform at the 2017 City of London Wealth Management Awards, Best Direct SIPP Provider at the Awards 2017, Best Stocks & Shares ISA Provider at the 2017 Shares Awards, as well as Best Self Select ISA Provider, Best Online/Execution-only Stockbroker and Best Investment Platform 2017 at the FT and Investors Chronicle Investment and Wealth Management Awards, as voted by readers of the FT and Investors Chronicle.

Headquartered in Mayfair, London, the Tilney Group employs over 1,000 staff across our network of 30 offices, enabling us to support clients with a local service throughout the UK.