Savers are piling cash into their pensions but still have an unrealistic idea of the sort of retirement they can afford, says a new survey. Younger savers are managing to save £5,000 a year for a pension or as a deposit on a home of their own, says financial firm Scottish Widows.
Three-quarters believe the cash stash will buy them a higher standard of living in retirement than they have now – or at least to keep their standard of living where it is now.
Many believed their pension savings would let them retire at 63 years old, with 60% looking forward to regular holidays abroad. Almost half would go to the cinema or theater more often, while one in four are planning to eat out more often and to update their wardrobes.
Salaries too low to save
Once retired, one in five plan to author a novel, 15% want to become entrepreneurs, 24% expect to learn a new language, while the same number are also looking to self-build their dream home.
The research asked savers aged between 18 and 34 years old about their saving habits and thoughts about retirement. The study found the average monthly saving was £214, but a third of workers had no savings.
However, only 14% felt they were saving enough despite their grand ambitions for later life. The main reasons for failing to save were salaries were too low (18%) or rents were too high (11%). Although many were not saving enough, half had their heart in the right place, stating that they preferred to save rather than spend.
Scottish Widows spokesman Jackie Leiper said: “It’s exciting to see that so many young Brits are viewing their future retirements with optimism and confidence and many are making financial plans to support themselves in later life.
“It’s normal for the younger generation not to save as much as older individuals because generally they are on lower wages and saving for other items, such as home ownership, or are paying off debt.
“However, money saved at the age of 25 could provide twice as much retirement income as money saved at the age of 50, even allowing for inflation.”