Money worries can often weigh heavily on people's minds, but just what's the biggest financial concern people face? Well, for some it may be something as simple – and vital – as making ends meet every month, but on a long-term basis, it seems as though the biggest financial worry is that a person's savings won't be enough to see them through retirement.
The research, from Alliance Trust Savings, found that this was the biggest long-term financial fear for 23% of retail investors surveyed, while 19% said they were most concerned about funding their health and care in later life. The risk of high inflation impacting savings was a major concern for 9% of respondents, while 6% feared further changes to pensions or taxation. However, a lucky 8% had no concerns at all about their financial future, which perhaps highlights the importance of proper planning.
Knowing your financial plans in retirement – or at least your aspirations – can go a long way to helping you prepare. Happily, many are sensible in their plans for their pension pots, with 75% saying that funding retirement was their first priority when accessing their savings, while 7% planned to set aside money for care and 3% wanted to use it to help pay off debt. Just 2% prioritised spending the money on a new car, house or dream holiday.
Respondents were also fairly on the ball when it came to pension freedoms, with 54% saying they understood the choices available, a further 35% saying they know a bit about them, and just 5% feeling completely clueless. This suggests that the majority are at least slightly knowledgeable when it comes to their options at retirement, which will hopefully mean they're starting to get prepared for the main event.
"As we're all living longer, planning how to fund our lifestyle once we've finished working is a serious consideration," said Brian Davidson from Alliance Trust Savings. This is especially as the pension landscape has now begun to place more emphasis on individual responsibility through personal and employer contributions, he pointed out, rather than reliance on state pensions or salary-based schemes.
"It is encouraging to find that the majority of investors are aware of the pension freedom changes, and even with the new flexibility over access, continue to earmark their pension pots for their financial needs in retirement."
The key to avoiding long-term financial planning fears is to actually get planning! Try to save as much as you can into a pension to build up a healthy pot, and find out what you can do with those savings by reading more about the pension freedoms. Once you've got a bit of knowledge and are confident your savings can go the distance, your financial fears could begin to ease.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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