Retirement savers do not have enough money to save into a pension after they have paid their monthly bills. A massive 93% of 45 to 54 year olds approaching retirement complained that they could not save any more or sometimes anything at all because they had too many bills.
Just one in eight older savers, aged between 55 and 60 years old, said they had nothing stopping them saving. For 27% of the rest – or one in four savers – expensive mortgages and other debts stopped them saving, according to a survey by financial firm Aegon.
Almost twice the number of women (9%) as men (15%) aged over 45 years old confessed they had enough spare cash to save more if they wanted.
Life is too expensive
The study was aimed at finding out why workers approaching retirement were not saving more money into a pension. Steven Cameron, Pension Director at Aegon, blamed expensive mortgages for the problem.
“For those in their 20s and 30s, it may be tempting to put off retirement saving, hoping to become free of pressing financial commitments, but that day may never come, with mortgage repayments and family financing no longer just for the under 45s,” he said.
“Escalating property prices mean people are taking on larger mortgages which won’t be repaid until later in life. We’ve seen some mortgage providers increase the age at which a mortgage can be repaid to 80 or later.
“People are also starting families later, and increasing tuition fees coupled with a challenging employment environment for younger people mean parents often face supporting their children for longer than previous generations.”
The company also found that putting back the time to start saving for a pension was a risky decision for many savers.
“Deferring pension saving in the hope of a financial boost in your 40s is an increasingly risky strategy. Starting saving even modest amounts from an early age and regularly increasing this a little at a time can make a huge difference to achieving the retirement people hope for.,” said Cameron.
Aegon gives an example of someone who starts saving £80 a month from at 25 years old could have a retirement pot worth £232,000 when they reach 65 years old. If the same person started saving at 45 years old, they would have savings of around £52,000 at the age of 65.