We all like to think we'll have a comfortable retirement, yet more and more people are realising that this ideal may not be that easy to achieve. Indeed, the mid-life financial crisis is becoming increasingly commonplace, with research from Aegon highlighting the importance of forward planning.
Barriers to saving
The research found that a whopping 93% of those aged 45-54 say they face barriers to saving – or saving more – towards retirement. This is despite the fact that this age group is thought to be in their peak earning years, thereby making it a key time to catch up on retirement saving. Yet the figures show that it may not always be that simple.
The biggest barrier to saving is thought to be the cost of living, cited by 63% of respondents, while 39% cited insufficient income. Others were more specific, with 36% of people saying that mortgage or loan repayments were the biggest barriers, followed by the costs associated with family (32%), leaving little money left over to save.
Even those aged 55-60 still face difficulty saving for retirement: just 12% of respondents in this age group said there was no barrier to them saving, while 27% said mortgage or loan costs were a major barrier and 19% said the same for family-related expenses.
This highlights a "generational shift", the report noted, with mortgage and family commitments lasting much later into working life – and shows that it isn't only the younger age group who finds it difficult to save.
Don't put it off!
The overriding message we can take from this is to not assume that it'll be any easier to save for retirement in your 50s than it is in your 20s. So why wait?
"Nowadays, whatever your age, you're likely to face barriers to saving or saving more for your retirement," said Steven Cameron, pension director at Aegon. "For those in their 20s and 30s, it may be tempting to put off retirement saving, hoping to become free of pressing financial commitments. But that day may never come, with mortgage repayments and family financing no longer just for the under-45s."
Steven points out that escalating property prices mean people are taking on larger mortgages which won't be repaid until later ages – some mortgage providers have increased the age at which a mortgage can be repaid to 80 or later – with such financial pressure heightened by the fact that people are also starting families later. "Increasing tuition fees coupled with a challenging employment environment for younger people mean parents often face supporting their children for longer than previous generations," he added.
Ultimately, deferring pension saving in the hope of a financial boost in your 40s is an "increasingly risky strategy". So don't hang around – saving even modest amounts from an early age and regularly increasing this a little at a time can make a huge difference. Steven says that someone who starts saving £80 a month from their take-home pay at 25 could end up with a retirement pot worth £232,000 at age 65, versus a pot of around £52,000 for someone who starts at 45, so get saving from as early as possible and you'll stand a far better chance of having the retirement you aspire to.
Start saving by any means necessary! You'll want to start with a workplace pension, but don't overlook other long-term savings vehicles such as ISAs, giving you plenty of ways to build a nest egg for the future.
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