Pre-retirees are missing out on valuable interest earnings due to a lack of action in switching savings accounts, according to new research from UK savings and lending bank Shawbrook.
The study found that a third (33 per cent) of those aged 55 to 68 have never switched their savings account, while over a quarter (28 per cent) have not opened a new account. This inactivity could result in significant lost interest as many pre-retirees may still be holding onto accounts with less competitive rates.
The research highlights that a quarter of pre-retirees have not opened a new savings account in the past 18 months, and 27 per cent have not opened an additional account in the same timeframe. Even more concerning is that many are not actively checking their current savings rates. On average, pre-retirees have not checked their rates in five months, with one in five (21 per cent) admitting they have never checked their interest rates at all.
Interest rate impact
Despite this lack of engagement, the majority of pre-retirees (58 per cent) stated that interest rates are the most important factor when selecting a savings account, and 50 per cent agreed that rates play a key role in choosing a savings provider.
However, failing to stay informed on current rates means many could be stuck with lower returns, missing out on better options in the market.
Adam Thrower, head of savings at Shawbrook, commented on the findings: “A well-chosen savings account can provide both supplemental income and peace of mind during retirement. Whether you’re saving for a holiday, covering daily expenses, or simply building a financial cushion, many pre-retirees risk missing a key opportunity to enhance their retirement plan. Alarmingly, one in four individuals never check their savings rate, potentially losing out on hundreds of pounds in interest.
“With the Bank of England cutting the base rate to five per cent in August, savings rates are likely to decline. Pre-retirees should act swiftly to ensure their savings strategy isn’t the missing piece in their retirement puzzle. The window to lock in high long-term fixed rates may be closing, and maximizing this opportunity could be crucial for those nearing retirement.”
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