What’s your retirement savings target? How much pension will you need? How much will you need to have saved, invested and put aside for your financial future?
Don’t worry if you can’t answer these questions quickly. A considerable number of people don’t have a ready answer to this critical question.
According to new research, around 40 million UK adults could be taking their chances when it comes to retirement, admitting they either have not or did not set a savings target.
The research, as part of Sanlam’s “What’s Your Number?” report, is highlighting how a lack of basic knowledge about retirement planning could be damaging our ability to reach future financial goals.
Within the report, it found that more than half of UK adults don’t think they can save enough money to retire when they want to finish work.
Only 12% of under-55s have a specific target for the size of their pension pot.
This lack of knowledge around retirement planning is brought into sharp focus by the fact that four times as many people know their lottery numbers off by heart.
It’s the 45-54 age group who are mainly at risk from this lack of explicit knowledge and goals. Only 18% in this age group, which should be saving at a significant rate, have set retirement goals.
Applied across the UK population, that means that 8.2 million adults are heading into retirement without a clear set of goals. They could be failing to make the most of some of their most lucrative years of career earnings, undermining the opportunity for a financially secure retirement.
Within the research, there’s a significant gender gap. Women are particularly exposed to a lack of precise retirement planning.
Only 18% of women have set a financial target for retirement, compared to 29% of men. With women already facing a gender pensions gap, this lack of clear retirement objectives could be especially harmful.
Knowing your number and, more importantly, understanding what it means for your current and future lifestyle is really important.
The gap between what people think they need and what they actually require in later life is huge, and sometimes life-changing.
When taking clients through this it becomes very clear. We paint it out in pictures and it very quickly highlights the important issues. Blue and Green is good, red is bad.
Despite years of industry effort to turn the tide, engagement with longer term savings, as highlighted in this report, is shockingly low.Jon Doyle, Financial Planner, Juniper Wealth Management
The research discovered that the main aims for retirement were not having to worry about money, maintaining a current living standard, and being free from debt.
Other retirement planning goals include having a regular income and repaying the mortgage before retiring.
So why are we failing to plan for retirement? Around two-fifths of UK adults don’t see setting targets as being essential for their long-term financial planning, which could explain the complacency.
This report suggests that we are about to see a significant number of people approaching retirement who will be ill-prepared and severely disappointed when faced with their retirement reality.
By taking some very simple steps, setting clear financial goals, and identifying a clear path to get there, catastrophe can be avoided.
When setting goals people can often get stuck on not having big, inspiring or ambitious goals but I think it can be much simpler than this.
Sometimes that goal can be a simple as knowing what your don’t want to have happen.Jon Doyle, Financial Planner
It’s hard to understate the importance of having clear goals for retirement savings.
Knowing how much you should be saving each month, and your clear financial goals to maintain the desired lifestyle in later life, are critical to a successful retirement.