Middle-aged workers are feeling the financial pinch and are the most and are most likely not to have any retirement savings.
Millions aged between 45 and 54 years old spend more than half their income on monthly bills and have no retirement savings, according to new research by investment managers Blackrock.
Astonishingly, the study reveals middle-aged workers spend more time looking at where to go on holiday than saving money for their retirement.
The results also found that saving for retirement with the help of a financial advisor gives many more control and confidence over their money.
Blackrock says the survey shows that middle-aged workers need to reconsider their financial priorities.
High expectations
The research dismisses their financial plans as over confident, because not only do they pay more bills and save less than any other age group, they expect the highest income in retirement.
To maintain their lifestyle, they need an annual income of £28,655, which is nearly twice the national average income of £15,548 of a single pensioner.
But, says the firm, around 66% of middle-aged workers have no concept of how much they would need to save in a relatively short time to earn this income in retirement.
They told researchers they guessed they would need around £250,000, when the financial reality is they would really need more than double that amount in a pension pot – £549,000.
Although four out of 10 said funding their retirement was a financial priority, only 20% would put an extra £100 month into savings for retirement, while 37% revealed they would spend more time sourcing a holiday than pension planning (14%).
Investment misconceptions
Few realised the impact inflation would have on any savings they managed to set aside – as £200,000 in the bank five years ago is now worth just over £169,000.
Blackrock’s Tony Stenning said: “The study highlights half of 45-54 year olds – more than four million people – have lowered their sights on the lifestyle they want after giving up work. Almost a third say they will work past retirement to build a better financial future for their later years.
“Many do not understand how to invest and keep their savings in cash and have little interest in risking investments for higher returns.
“They should look at how low interest rates and inflation are eating into their savings and look at finding a higher return from their cash to ease their retirement finances.”
