By Martin Palmer, Head of Corporate Benefits, Friends Life
As living costs continue to rise it’s becoming clearer that financial stability and security in retirement isn’t a certainty and that greater importance needs to be placed on starting to save for retirement as early as possible.
That’s why it comes as a surprise that retirement saving consistently still remains low down the list of financial priorities in both our own and wider industry research. A new study from here at Friends Life shows retirement saving is right at the bottom of the list when it comes to our financial priorities. Our next big holiday or making home improvements is significantly preferred to squirreling some money away in the kitty for the future with just 13% of women and 16% of men considering saving for retirement a top priority. Given that retirement is often described as the longest holiday of your life it is important that people make sure they have enough money to truly enjoy it. It seems that even with constant reminders from the media about the possibility of an impending pension crisis, for many retirement planning is just not a concern. This is concerning. In the current economic climate, it is understandable that household bills and mortgage payments are high up the priority list, but retirement provision must not be forgotten and it is important to remember that many of the same bills will need to be paid for in retirement.
Ominously our research also reveals that women give retirement planning even less thought than men, with only 13% listing it as a priority compared to 16% of men. With historical research showing that women are likely to have a significant smaller income than their male counterparts after retirement, it is worrying to see that pensions remain at the back of many women’s minds.
As more women than ever make up our workforce, it is time we start addressing the trend of women not saving enough into a pension. In some ways women have more to worry about. Women live, on average, longer than men and the likelihood that their pension contributions will be interrupted by time off work for childcare is higher. With these factors in mind it is especially particularly important that they think carefully about providing adequately for their retirement and as an industry, we need to do more to help them do so. Other, more tangible and more immediate, temptations to spend money are always going to be there, however one important way we can bring home the consequence of retirement saving is to emphasise the reality of retirement should the right provisions not be put in place.
With a number of people already facing a pension shortfall, we face the real danger of seeing more and more people reaching retirement age without the financial security that they may expect or desired. Everyone enjoys a holiday, but prioritising such pleasures should not jeopardise retirement security.
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