Nearly nine out of 10 self-employed workers are not saving enough to provide enough money for a decent retirement, a new study has revealed.
Only 15% are confident they have enough put aside to retire, while 75% are saving nothing.
The revelations come from an international study of attitudes the self-employed have towards retirement by pension provider Aegon.
In Britain, the study found around 4.6 million self-employed with almost 3.5 million failing to make any regular pension savings – placing the UK 14th out of 15 countries in the survey.
Although the self-employed in the UK have a low level of saving and few feel confident about how much they will have to add to the state pension, many can pick the date when they stop working easier than employees or choose to carry on as part time workers.
Financial challenges
Around 10% felt they would never have enough money to retire, while only 53% considered that they might have to work until they are at least 65.
Kate Smith, head of pensions at Aegon,
said: “Against a backdrop of rapidly increasing numbers of self-employed in the UK, there’s a growing concern that this group are increasingly likely to struggle with inadequate retirement income when they eventually give up working.
“The self-employed face unique challenges when it comes to saving for retirement. As well as missing out on a lifetime of employer contributions, a variable income means many don’t have certainty of how much they’ll earn from one month to the next, making saving difficult.
“Preparing for retirement requires a long-term do-it-yourself approach which is currently being overlooked by too many of the self-employed.”
Selling businesses to pay for retirement
A recent separate survey by the company disclosed that many of the self-employed are relying on the sale of their businesses to fund retirement.
Around 650,000 self-employed are hoping they can sell their business and make enough to give up work.
But they need to watch TV’s Dragon Den to get a reality check on how to value a business as many entrepreneurs vastly over inflate their worth.
Steven Cameron, pensions director at Aegon said: “Our research shows the self-employed have particular needs and aspirations when it comes to saving for retirement. There are real risks in assuming a business can fund you through retirement.”