Retirement savers aged over 55 are falling tens of thousands of pounds short of their savings targets, according to new research by a leading bank.
The findings of a survey looking at savings habits by HSBC Bank shows that 35 is the watershed age for savers.
Younger savers put less money away, but if they can maintain their savings over a long period, stand to gain bigger pension pots than older savers.
After 35, savings dip as the costs of financing children, paying off larger mortgages and other credit.
Missing goal by £67,000
The over 55s feel they need a large pot and are aiming to save almost £100,000 (£99,495) for their retirement, perhaps as they are more aware of the significant cost involved. At current rates of saving, they will only manage to accumulate £31,900, missing their goal by an average of £67,600 or 70%, says the bank.
Those aged 16 to 24 are less ambitious, aiming to save only £48,400.
The benefits of building a cash fund to add to retirement income is highlighted by state and private pension statistics. The full basic state pension pays out £107.45 a week or £5,587 per year, while a private pension for the average retiree (£27,207) provides an annual income of just under £1,400, giving a combined annual income of £6,987.
The average cash savings of £70,100 add an extra £3,689 per year to retirement income.
Despite having lower saving targets than men (£86,700 vs. £97,800), women are likely to have a greater shortfall on retirement. At their current rate of saving, they are set to raise £53,800, falling £32,900 short of their goal.
Long term savings hindered
Bruno Genovese, head of savings at HSBC, said: “The increased financial responsibility that many people face around their mid 30s, such as buying a house, having children and taking on more debt, seems to be hindering long term savings habits, despite the good intentions.
“This divides UK savers between younger generations with the potential to meet their long term savings goals and older generations who have higher and more realistic aspirations but have often left it too late to achieve them.
“Retirement is expensive and people will appreciate having a decent cash savings pot to supplement any regular income. It is important that they start saving early and getting into a good savings habit, not just to meet short term goals but to help cover unexpected expenses and secure their desired standard of living later in life.”