Savers find working out their retirement finances years in advance is too complicated, say pension experts.
Actuaries from the US, Britain and Australia looked at why people in each country seem to struggle with pensions and savings.
They found a common reason – they lack vital information about how to save, such as:
- How much money do they need to fund a comfortable retirement?
- How long will they live and will their money last until the die?
- How will they pay for long term care if they become ill in their old age?
“Many people start planning but can’t follow through because they aren’t equipped to address complex questions like how much they need to save for retirement, how they will cover the risk of an especially long life, or how they will handle unexpected costs associated with chronic health conditions as they age,” said American Academy of Actuaries spokesman Ted Goldman.
Different countries with similar expectations
“A concerted effort by policymakers to support education initiatives could help savers sort out the tough questions they face as they prepare for their retirement future.”
The report Retirement Readiness found that differences in culture and retirement planning in each country, people had similar retirement expectations.
Part of the problem, explained the spokesman, was in each of the countries, companies were moving away from direct benefit pensions with guaranteed incomes to direct contribution schemes that offered no guarantees.
“This has led to many planning not to retire at all, most planning to retire gradually rather than fully, many planning to retire at older ages, and relatively few expecting a comfortable lifestyle in retirement,” said Goldman.
Retirement saving target needed
The report also disclosed that women were not as financially prepared as men to retire and that the UK lagged retirement readiness in the US and Australia.
“The results clearly indicate a need for more education related to financial literacy and retirement planning,” says the report.
“While the results suggest a broad need, the results also suggest the possibility of particularly targeted and potentially differently designed educational approaches based on age, gender, and income in all three countries.”
The report also recommends workers should be provided with a retirement saving goal to help them focus on putting more money aside when they were working.