One in five (18%) workers in their fifties and sixties are unable to save anything for their retirement, as everyday living puts too great a strain on their finances, while millions more are unaware of how much they need to be able to retire.
As the cost of living continues to rise, Aviva’s research shows many older workers are struggling to save for retirement. Two in five (43%) of those aged 50-59 are only “occasional” or “absent” savers¹, while over a third (38%) aged 60-69 fall into the same categories – either saving infrequently on an ad-hoc basis with no clear savings goal, or unable to afford to save anything at all.
Aviva’s findings reveal that two thirds (64%) of workers in their fifties are yet to ramp up their pension saving in the run-up to retirement. Similarly, over half (54%) of those in their sixties – who are fast approaching or may even have passed the eligible state pension age – are yet to increase saving into their retirement fund.
The mid-life savings crisis doesn’t stem just from an inability to save. Millions of older workers also lack a clear picture of how much they will need to save for their retirement, meaning their saving habits are not being informed by the reality of their situation.
Two in five (42%), just over four million older workers2 have not yet calculated how much money they will need in retirement, including half (49%) of those in their fifties and a third (36%) in their sixties.
Turning 50 sparks spending changes
With older workers expecting to reach their “peak earnings” at the age of 51, the fifties mark a step-change for older workers and their finances.
As incomes peak and retirement approaches, over half (58%) of older workers look to change their spending habits after turning 50, but not necessarily everybody opts to save more beyond this milestone.
A quarter (26%) of older workers now spend less since turning 50 because they are more conscious of the need to save for retirement. Nearly one in six (15%) do so because they have already reduced their working hours or are working part-time, and their income is likely to be reduced as a result.
While some opt to save more, one in ten older workers (10%) use their higher disposable income post-50 to spend more. Many of those who have changed their spending habits have done so to help out younger generations: 10% of older workers say they spend more on their children and less on themselves since turning 50, a figure that rises to 41% among those with financially dependent children or parents.
Lindsey Rix, Managing Director, Savings and Retirement at Aviva said: “It is worrying to see so many of the UK’s older workers in the dark over how much they need to save to afford a comfortable retirement. Planning and provisioning for retirement can be a great unknown, and complicated for many, but burying your head in the sand will only worsen the situation.
“As the cost of living creeps up and wage growth continues to slow, saving for retirement in the current climate is particularly challenging. For many older workers supporting family members including children and parents, saving for retirement can all too easily take a back seat in terms of financial priorities.
“These findings show the importance of industry and government taking action to help consumers become better informed and active savers. This includes using auto-enrolment to encourage contributions from a younger age; implementing the pensions dashboard so that people can view their savings and track their progress in one place; and using concepts like a mid-life financial MOT or career review to help those in their fifties take stock and plan for later life, including health and wellbeing as well as financial priorities.
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