The huge number of workers in denial about their retirement savings is laid bare in a new survey.
Research by The Equity Release Council (ERC) has revealed that 65% of British retirement savers are ‘unaware, unwilling or unable’ to face up to the financial challenge they face.
Indeed, one in 10 people believes they won’t have anything saved and will have to sell their family home to finance their retirement.
Only 16% of people are making a conscientious effort to save and are giving up luxuries in order to provide for their retirement.
The ERC says those savers are just one of five groups of people they have identified.
Of the 65% who are not saving, they say 30% are ‘overstretched’, 19% are in denial and 16% confess they are ‘confused’ about what they need to do to finance their later years.
Budgets under pressure
Nearly 20% said they were optimistic that they had enough time to save and appreciated the need to prepare.
Chairman of the Equity Release Council, Nigel Waterson, said: “It’s understandable with people’s budgets under pressure that they prefer to focus on the present and not on the future.
“Unfortunately, their inaction may prove costly in later life and they should seek out professional advice on retirement products.”
He urged more people to identify the financial steps they need to take to secure their finances in retirement, such as planning for pensions, learning more about annuities and whether home equity release is an option.
Waterson explained many people are hoping to sell their home to provide money for retirement, but other options are available without having to sell a property.
Selling the family home
To underline just how poorly prepared many people are, recent data from the Office for National Statistics revealed 76% of households in the UK are paying into a pension, few are putting enough cash in to their savings.
However, the amount saved has grown since December 2009, but many savers are unaware that they need a fund of £458,300 to generate a pension income of £15,000 a year – compared with 29% less or £354,100 needed four years ago.
Since 2009, the value of annuities has declined. Annuities provide income from investing the pension.
ERC research also found selling the family home, or accessing its equity, to pay for retirement is an option for nearly 10% of retirees. However, a larger group – around 18% – doubt that they will for have a property to sell as they cannot afford to buy a home.