Failure to save enough for old age

N O N – R E T I R E E S

It’s never too late to think about saving for retirement

The significant increase in property prices in recent years has likely shifted many people’s expectations of the role property wealth will eventually play in supporting their retirement. With people spending longer in retirement, one of the challenges that many need to overcome is how to fund it and how to meet the financial demands they may face in later life, such as the cost of long-term care.

Failure to save enough for old age is forcing more people to use their property to provide income. Research shows so-called ‘Hippies’, or the ‘Home is my Pension’ generation, are increasing at a significant rate. 22% of people are planning ahead for their retirement and expect to use the value of their home[1].

The findings indicate that a third of all people who aren’t currently retired (35%) own a property but have less than £10,000 saved in their pension pot.


Worryingly, a further 22% of people hold no pensions savings at all. The significant number of small or empty pots, coupled

with the 24% increase in median house price values in England and Wales since 2016[2], could be driving more people to

consider using their property wealth to fund their retirement.

Property is often the largest asset someone has when they reach retirement, especially if they have lived there for quite a while, and will often significantly outweigh any pensions savings they have.


Based on current house prices in England and Wales, the average homeowner could access over £72,988 in equity release, for

instance[3]. People who aren’t currently retired expect to downsize their property (10%), sell their property (9%) or access

equity via a lifetime mortgage (6%) to help fund their later life. While many people looking ahead to retirement are hoping to access property wealth, there are a significant number of retired homeowners who could also benefit from considering the role their property might play in funding their lifestyle.


Nearly two-thirds of people over 65 are dependent on the State Pension as their main source of income and are

also homeowners. The findings show there are a large number of people currently in retirement who may be on a limited income and could benefit from the likely increases in the value of their home.

How much do you think you’ll need to fund your retirement?
Of course, the answer to that question will depend on what you want to do when you stop work. Worryingly, almost half of non-retirees (46%) are unable to identify how much they believe retirees receive annually from their State Pension, according to a survey[. Only 53% knew that retirees receive £9,628 per year from their State Pension, with those aged 55 and over being more likely to identify correctly how much retirees receive (70%), compared to only 40% of those aged between 18 and 34.


The survey also showed that over half of non-retirees with a pension are worried that they are not saving enough for their retirement (56%), with only one in five (21%) confident that the amount they are saving in a pension is enough to let them live the lifestyle they want when they stop working. In fact, three-quarters (75%) of non-retirees say they believe they could

save extra into their pension to boost their pension savings, with the average additional contribution being £68 per month.


One in six (17%) say they could only pay in less than £25, just over a quarter (26%) say they could pay in £25 to £50 in additional contributions, while a further quarter (25%) say they could pay in between £51 and £200 in additional contributions. Seven per cent say they could pay in more than £201 per month in additional contributions.

Most people in the UK who work or undertake caring responsibilities will be eligible for a full State Pension if they have worked and paid National Insurance contributions or been a carer for 35 years.


But the research finds that the majority of the public (78%) do not know how much new retirees with a full State Pension will receive. As could be expected, older people and those who are retired tend to have the highest awareness, with almost half (46%) of those aged 65 and over and two in five retirees (43%) saying they are aware how much retirees will receive from a full State Pension. However, even among these groups, many are unaware of the amount that retirees receive (54% of those 65+ and 57% of those who say they are retired). When asked if savers plan to rely on the State Pension come retirement, just over a third (36%) said that they expect to rely on it as their main source of income, especially those aged between 55 and 64 (49%). However, one in five said that they remain unsure what they will rely on in retirement (18%).


Furthermore, younger people (those aged between 18 and 34) and those with other types of pension are less likely to say they will rely on the State Pension as their main source of income (26% and 31% respectively).

For many people, the best way to provide an adequate income in retirement is to save gradually throughout their entire working life and save what they can afford. However, depending on their financial circumstances, some may prefer to save less when they are younger and more when they are older, especially if they expect to receive an inheritance before they retire.


Unfortunately, many of us struggle to put enough into our pension pot during our working lives because the costs of buying a house, raising a family and covering day-to-day living expenses eat into disposable income.

The earlier you start retirement planning, the better. However, with the demands of managing a busy working and personal life, this is something that can understandably be neglected. But it’s never too late to think about saving for retirement – even if you are planning to give up work in just a few years’ time, you will have options to add to your nest egg.




Source data: ave gradually throughout their
[1] Opinium survey of 4,000 UK adults between 31 October and 3 November 2021
[2] Office for National Statistics, House price statistics for small areas in England and Wales: year ending March 2021, Nov 2021
[3] Legal & General customers accessed, on average, 24.5% of the value of their home through equity release, putting the expected amount that can be accessed across England and Wales at £72,988: Office for National Statistics, House price statistics for small areas in England and Wales: year ending March 2021, Nov 2021
Source data:
[1] Pensions and Lifetime Savings Association (PLSA) – a total of 2,075 people took part in the nationally representative survey, carried out by Yonder Consulting. The survey took place between 25 August and 26 August 2021

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