We all know that we should be saving for the future, but unfortunately, other things can get in the way – and this can have long-term financial consequences.
According to research from Equiniti Employee Services, a large number of people could be facing a long-term savings gap that could become a financial time bomb in later life. The figures show that 63% of workers have made no financial provision for their future, with just 32% making regular savings and 5% regularly investing. This isn't always due to apathy, however, as 27% said that they try to save, but other financial commitments make it difficult.
In fact, 81% said that they're currently facing financial challenges: 29% are worried about paying off their mortgage while another 29% are concerned about clearing debts, and 14% don't think they'll ever be able to get on the housing ladder. A further 19% are worried about not being able to retire, while some have more short-term concerns, with 24% being worried about not being able to afford treats and life's luxuries.
Happily, saving for the future was a key lifestyle consideration for 37% of employees surveyed, but at the other end of the scale, just 23% saw having a pension as a priority. This is particularly concerning, as while there are of course other ways to save for retirement, having a pension – at the very least a workplace scheme – should be a key part of forward planning.
It's for this reason that the Government has launched its latest campaign to get people to engage with their pension. Its headline message – "don't ignore your pension" – aims to highlight the importance of joining a scheme, and is particularly aimed at employers and employees of smaller firms who will only now be approaching the time when they're obliged to offer a workplace pension through automatic enrolment.
"We have made great strides forward by automatically enrolling more than 5 million people into a workplace pension – now the challenge is to make sure hardworking people with every type of employer get to enjoy this major financial benefit," said Pensions Minister Baroness Altmann.
"This is a fun and quirky campaign but behind it lies a very serious message. We need everyone to know they are entitled to a workplace pension – and we need all employers to understand their legal responsibility to their staff, but also to feel more positive about engaging with workplace pensions."
The message is clear – if you're not yet enrolled in a pension but you have the option to do so, get signed up! There'd be nothing worse than getting close to pension age only to find that you won't be able to achieve the retirement income you're hoping for, because in most cases, the state pension simply won't be enough.
Even if you're years (or decades) away from retirement, you'll want to start saving early. The sooner you start the bigger the pot you'll be able to build, and hopefully, the more comfortable your retirement will be. You may want to think about other savings vehicles to complement your pension, too, such as cash ISAs to maximise the tax benefits, or even a stocks & shares ISA if you've got a higher risk appetite. These can be particularly suitable for long-term savings goals, but you'll need to be prepared for the fact that you may get out less than you put in – find out more about these ISAs here.
You may want to discuss the options with a financial adviser, too, as that way you can have a clear route to help you achieve your long-term goals. Having suitable financial plans can make all the difference and can mean you don't face a shortfall in later life, so start planning and you can approach your older years with confidence.
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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