General Insurance Article - UK Retirement Savings Map reveals mix of pension,and ISA's

 Britons plan to accumulate a ‘basket’ of products and sources of income* to fund their retirement, according to the latest Friends Life UK Retirement Savings Map. Based on a survey of 7,000** people across the UK, the study by the life and pensions provider benchmarks how active people are in preparing for retirement and the types of products and sources of income being relied on.

  

 The study found that when it comes to securing income during retirement, savers expect to use state, company and personal pensions, ISAs, stocks and shares and property. However, when people actually begin retirement, generating an income from property falls down the list as retirees heavily rely instead on pensions and existing savings.

 When it comes to securing additional funds during retirement, three in 10 (29%) people plan to supplement their retirement income with a savings account and nearly a fifth (18%) plan to use a cash ISA. Furthermore, one in five (17%) said they wanted to downsize or sell their property to unlock funds. However, when it comes to those actually living in retirement, only 4% have used funds from downsizing or selling their property.

  

 Andy Briggs, Group Chief Executive at Friends Life said:

 “It’s hugely encouraging to discover that people are preparing for retirement by putting in place such a comprehensive ‘basket’ of retirement products. It demonstrates that people are aware of the need to plan ahead and to understand the options available to them so they can work out how best to secure their future. However, while steps are being taken, our research shows there is still a gap in understanding how much income will be needed during retirement. On average, based on current savings behaviour, people are facing a financial shortfall of nearly £100 per week during retirement. This is why it is so important to take action early to be prepared so that whether you generate income from savings, property, investment or work, your future income can be as healthy as possible.”

  

 Pensions remain the most important way of saving for the long term. Over half (52%) of people plan to use a state pension while 39% hold a company pension and 25% a personal pension. For those already retired, the focus on pensions is much higher with nearly three quarters (69%) of current retirees using a state pension, over half (53%) drawing from a company pension and 26% a personal pension.

  

 While it is positive news that people are preparing for the future and building a healthy ‘basket’ of retirement savings and sources of income, the Friends Life UK Retirement Savings Map continues to show that people will face a shortfall when it comes to retirement income versus the cost of living. Based on current saving trends, the average total amount of retirement income per person of £307 per week will not be sufficient once living and housing costs have been factored in and will leave people facing a financial shortfall of £95.34 per week.

  

 The Friends Life UK Retirement Savings Map identified differences in long term savings behaviour by region and city:

 When it comes to saving for the long term in addition to a pension, more people in Edinburgh and Manchester than any other city plan to use savings accounts (36%) to fund their retirement

  

 Bristolians are most likely to prioritise inheritance as a way to supplement their retirement income (19%)
 When it comes to supplementing income during retirement through selling or downsizing property, it is those in the South East (21%), who are most likely to plan this

  

 In contrast, staying invested in the market with stocks and shares is the most popular way of generating additional retirement income both in the South East (12%) and London (12%)

  

 Nearly one in five (16%) of those in Cardiff say they will supplement their retirement income with rental income from property

  

 

  

 *The products and sources of income that people rely on to fund retirement are:
 1. State pension
 2. Company pension
 3. Personal pension
 4. Savings account
 5. Cash ISA
 6. Equity ISA
 7. Stocks and shares
 8. Other investments
 9. Rent from property
 10. Selling/downsizing property
 11. Equity release scheme
 12. Continuing to work full-time
 13. Continuing to work part-time
 14. Financial support from children/family members
 15. Inheritance

 
 ** YouGov survey conducted in March 2015. Sample size: 7,092