Unbiased, the financial advisor marketplace, commissioned YouGov, the market research firm, to find out how prepared UK citizens are for retirement.
Amid the cost-of-living crisis and other economic uncertainties, many UK adults are not confident in their ability to save enough for their desired retirement. In fact, those aged 45 and over are less confident about their retirement savings than their younger (18 – 34 years old) counterparts. Forty-four per cent of younger consumers feel prepared while 31 per cent of those aged over 45 do not.
This shows many could be facing financial insecurity as they approach retirement age. A further divide can also be identified in gender. Only 29 per cent of women feel confident about their retirement, compared to 42 per cent of men. This highlights the persistent gender inequalities in financial planning and the need for solutions to close the gender pensions gap.
Despite widespread concerns over not having enough time to save, the data reveals a worrying disconnect in personal retirement planning. Seventy-five per cent of working UK adults who have a pension pot do not know its current estimated value, while 26 per cent of all working UK adults do not know how much they hope to live on annually after they retire.
In addition to limited personal understanding, many people lack the broader contextual knowledge necessary for effective retirement planning. Key pension terms such as ‘defined benefit’ (70 per cent), ‘defined contribution’ (64 per cent), and ‘triple lock’ (56 per cent) remain unclear to a large portion of the population. This highlights considerable shortcomings in overall retirement literacy.
How can people be better prepared?
Against this concerning backdrop, only 20 per cent of people report using a professional financial adviser for retirement advice, with family and friends being the most common source at 29 per cent. Given the broader findings, this reliance on informal advice may be contributing to the ongoing challenges in retirement readiness.
However, among those who use financial advisers, many report gaining a clearer understanding of their financial goals (36 per cent) and even experience reduced financial stress (26 per cent).
Karen Barrett, CEO and founder of Unbiased
Karen Barrett, CEO and founder of Unbiased comments: “Preparing for retirement is one of the most important financial steps we can take in life, but it can feel daunting. And, as our research shows, too many people in the UK are approaching retirement without a clear plan.
“It’s crucial not to bury your head in the sand. Getting an informed plan in place as early as possible is key. Speaking with a professional can help cut through the jargon and give you the confidence to make the right decisions for your future.
“At the same time, the advice industry must work harder to lower the barriers to accessing quality advice, especially for those with fewer assets. Government action on mandatory pension schemes, education, and public awareness is also critical to improving the nation’s retirement readiness.”
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