When it comes to savings priorities, many Brits are happy to squirrel cash away to pay for a dream holiday, or the perfect wedding. However, while these short-term goals make up some of life's pleasures, it seems that some of this saving comes at the expense of long-term financial needs, which could mean that pension pots for retirement just won't be up to the job.
Research carried out by Aegon UK found that many Brits were die-hard savers when it came to gathering up the funds for important life goals. For instance, over half of those questioned (51%) said that they would be prepared to save 'for as long as it takes' for the holiday of a lifetime, while over a third (34%) declared that they would do the same for a dream wedding.
Other short-term goals that ranked highly on the savings list were paying for children's education (37%), paying off debt (25%) and getting together a deposit for a home (21%). However, only a fifth (19%) of respondents said that they would prioritise saving for their retirement over their short-term goals.
This is a worrying finding, especially as only 6% of those surveyed were financially on track for the retirement they want. Even more worrying was the finding that 36% of those asked admitted that they had no pension savings at all.
The research also highlighted that some of us take the easy option when it comes to paying for short-term goals. Rather than saving and counting the pennies, 36% of those questioned said that they are happy to borrow money to pay for a holiday, while another 33% said they would get a loan to pay for their children's education and 26% would borrow to put together a deposit.
"It's worrying to think that consumers are pushing saving for their retirement to the bottom of their financial priority list," commented David Macmillan, managing director of Aegon UK. "It's important to have short-term goals, like a holiday, to look forward to, but it is also vital to ensure you are looking at the bigger picture.
"With life expectancy now indicating that people may live for 20 or 30 years once they have given up work, it's more important than ever for people to start boosting the amount they are saving for retirement."
You don't necessarily have to give up that trip of a lifetime, or throw out those wedding plans, but it is crucial to start putting together a pension pot.
First of all, make sure you are enrolled on your company's workplace pension scheme. Auto-enrolment means you will probably soon be on a scheme anyway, if you're not already, so why not start early? Work out how much you can afford to put away each month and remember, your employer will also be making a contribution, so any money you put in will be topped up for free!
If you have expensive goals on the horizon, try to get into the habit of saving for them rather than reaching for the credit card. A fixed term savings account or ISA is an ideal savings vehicle for this purpose – you won't be able to touch the money until your goal is reached, and the returns on these sorts of accounts tend to be higher. This way, you can stay out of debt but still enjoy that longed-for holiday.
So what are you waiting for? Check out our savings best buys, enrol onto that pension scheme and get saving!
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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