Midlifers Take Retirement Action
Over five million midlifers are taking action now to save more for retirement, new research suggests.
A massive 59% of 45 to 54-year-olds are now saving more for retirement, according to the latest research from Phoenix Group’s longevity think tank Phoenix Insights.
The data found that midlifers are facing an acute pension savings challenge and currently only have £88,000 on average in retirement savings.
This means they need an average of £160,000 more for a moderate standard of living in retirement, based on estimates from The Pensions and Lifetime Savings Association.
According to the survey, which quizzed 2,000 45 to 54-year-old workers across the UK, these midlifers are already reprioritising their current spending to ensure they can now support themselves in the future.
The data found that 18% are spending less money on holidays and luxury items, 14% are increasing contributions to a workplace pension, while 14% are putting more money into a personal pension.
Interestingly, 13% have set up automatic transfers into savings accounts.
Many are also taking smaller steps to build up large savings for retirement in the future.
The top sacrifices this group would consider making in the next 10 years to prioritise saving more include 44% saying they would cut back on eating out and takeaways, while 35% would save on buying a new car.
Patrick Thomson, head of research analysis and policy at Phoenix Insights, said: “Across the UK, we are grappling with how to make the most of our longer lives, including how we prepare and save for the years ahead. The challenge is clear, as only one in ten of this age group believes they could live on the State Pension alone when they retire without cutting down spending.
“Everyone’s journey to and through retirement will be different, and it’s clear there is no one-size-fits-all for how those in midlife are saving and planning for this time in their life. As we are living longer than the generations before us, we all need to think differently about our futures, and the futures of those we care about.
“For many, this can be a challenging topic to engage with. Our research shows that 49% of people aged 45-to-54 find thinking about their finances is the hardest part of retirement planning. But with the support of those around you, we can all take the steps – large or small – to build a better retirement.”
However, saving more is not easy as 63% of respondents admitted that the high cost of living is making it harder to save, while 20% said the increasing mortgage costs are making saving more challenging.
Yet, the research, published on Tuesday, shows that 42% have a plan for how they are saving for retirement, and 45% are trying to save more.
The research also found 10% of midlifers are considering downsizing their home to help them save more for retirement.
Some are looking to change jobs or take on more work to bolster their long-term savings, with eight percent considering applying for a higher paid job and eight percent considering applying for a second job. That is the equivalent to 710,000 45 to 54-year-olds across the UK.
Phoenix Insights previously found that 18% of 45 to 54-year-olds with workplace pensions are considerably less likely to hold only a defined benefit scheme for when they retire compared to 26% of those aged 55 and over.
At the same time, this generation of workers may have missed out on the benefits of auto enrolment for as much as 21 years of their working life, as the policy came into force in October 2012 and only applies to employees aged 22 and over.
