Pension Saving Lacks Feel-Good Factor

The thrill of spending today and not worrying about saving for tomorrow means 55% of workers do not consider they will have enough money set aside for a comfortable retirement.

Behavioural economists would say workers would rather enjoy spending now than consider their financial futures some years down the line – and the latest sentiment survey from financial giant Aviva confirms this.

Nearly a fifth of workers (18%) confessed they have no savings or investments and only 16% are planning to put more cash aside for their retirement in the coming year.

Despite their lack of retirement planning, 39% of workers are still spending on luxuries, like eating out, holidays and clothing.

The Aviva survey quizzed 13,000 workers across several countries to put together the results of the survey.

Worries over unexpected spending

In the UK and Europe, although many were feeling more confident about their national economies, they also felt their personal finances were still fragile.

More than half of workers are worried about unexpected expenses cropping up, like expensive home or car repairs.

Researchers were also told less than 40% of workers in six key European countries were making regular retirement savings, while around 50% expect to work past their nation’s normal retirement age to try to boost their savings and standard of living in their later years.

Tim Orton, pensions and investment product director at Aviva said: “The financial crisis may have peaked some years ago, but consumers are still feeling the effects. The downturn influenced spending behaviour and more families have cut back and do not feel they have enough money to save.

Lack of confidence in personal finances

“In the short-term they are holding back money to pay for day-to-day living, but in the long term, this could mean they lack enough income to retire and will have to work longer.

“Everyone can take some comfort that in general people are feeling more confident about the economy, but this is not reflected in having the same confidence in their personal finances. People must put savings aside to protect against life’s uncertainties and to fund their retirement.”

Behavioural economists explain that one of the problems about saving for retirement is too few people see the benefit of putting money aside in their 20s and 30s for their old age because they do not get the same feel-good from saving as they do from spending.

Below is a list of some related articles, guides and insights that you may find of interest.

Questions or Comments?

We love to get feedback from our readers. So, after reading this article, if you have any questions or want to make comments, send us a message on this site or our social media?

Don’t forget that you can also request the guides sent directly to your email inbox.