New research published by Scottish Widows today reveals that retirement anxiety is most prevalent among people in their twenties. This group were the most concerned about the potential impact of care costs in later life with over a third (34%) saying paying for care will be a financial priority in retirement.
In contrast, just a quarter (26%) of their parents' generation are worried that care costs will be such a priority. This generational shift in the perceptions and realities of retirement is underscored by the fact that half (50%) of respondents in their twenties believe that their income in retirement will be lower than that of their parents.
Levels of concern among young people are highlighted by over a third (36%) who worry they will retire too late in life to be physically well enough to enjoy the things that they want to do, including travelling and pursuing hobbies. This is in comparison to just one in five of respondents in their fifties who expressed the same uncertainty.
Concerns about working into later life are well-founded based on data published earlier this month showing that 8.2 million, the number of people enrolled in a company pension scheme, is the lowest it has been since 1953[1]. This is a particular worry given that recent research from Scottish Widows found that to meet their expectations for an average income in retirement of £25,200; a 30 year old starting to contribute into a pension for the first time would need to save £1,000 per month every year until they draw their pension.[2]
Despite these high levels of anxiety, the younger generation is failing to address the problem by not planning for the future. Fewer than one in twenty (4%) currently class saving for a pension as a financial priority, though if people start saving at 20 instead of 30, this can add up to 39% to retirement income. [3]
More needs to be done to increase the understanding of this age group, with just over a quarter (28%) of people aged under 30 considering themselves to be fully aware of all the options available to them in retirement.[4] When asked if they knew what an annuity was, fewer than one fifth (19%) of those in their twenties said they did.
Mike Teall, Head of Annuity Propositions at Scottish Widows, said:
"It is a concern that so many young people are already feeling anxious about their financial outlook and health in later life. We realise that their priorities may be paying off debt or saving towards a deposit, however starting to save at say 20 instead of 30 can make a huge difference to your income in retirement.
"As an industry we must work harder together in order to increase understanding of saving and of the various retirement options available to help people prepare adequately for a more comfortable retirement.
"Choosing how best to secure a retirement income, such as purchasing an annuity, can be one of the biggest decisions people make throughout their lives."
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