Spend now and hope someone will leave you an inheritance to fund retirement seems to be the pension plan for one in 10 people.
Rather than make an effort to put money aside in a pension, they are spending their savings and hoping to rely on someone else to make up the shortfall in their later years, according to new research.
Around 5 million people have adopted this plan, according to a report from investment firm The Share Centre.
The firm asked 1,500 people aged between 19 and 87 years old about their attitudes towards retirement and inheritance.
Many were not committed to a pension safety net to help them finance their retirement.
Savings accounts preferred to pensions
The researchers also found that pensions were not the favoured savings plan for many.
Bank or building society accounts were the main form of savings for more than half of the people approached for the survey (53%)
Cash ISAs were used by 40% and a workplace pension with employer contributions topping up the fund (39%) came in second and third.
Of the rest, 10% confessed they had no retirement savings.
The firm felt that the current working generation were not committed to saving as much as the one before.
Almost two thirds of those aged between 64 and 75 years old are already planning to leave an inheritance, even though doing so may leave them financially short in their later years.
Taking risks with retirement
Richard Stone, chief executive of The Share Centre, said: “A lot of people are taking risks with their retirement by hoping someone will leave them a sum of money rather than saving themselves.
“The money someone would have to inherit to last them a retirement of 25 or 30 years would have to be huge and delivered right on time.”
Stone explained that saving little and often was the key to funding an adequate retirement – and pointed out that investing may come with risk, but the return on the UK stock market had hit 600% since 1990 despite the financial problems faced by the economy.
“Investing and reinvesting the income from share can have a powerful effect on savings,” he said.
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