When we're young, it's easy to gloss over thoughts of retirement and the financial needs associated with it. It's decades away, after all, and many people have more short-term financial goals they choose to focus on. But, as the years creep on, those thoughts become more pressing, and there comes a time when even the least organised person realises that they need to think about the future – and Skipton Building Society has identified that retirement realisation sweet spot.
The Skipton Building Society Retirement Index has revealed that 35 is the age when the realities of saving for retirement begin to sink in, and people realise that they really need to start preparing if they want the retirement they're hoping for.
The figures highlight how much retirement optimism – and perceived preparedness – changes over the years. For example, 38% of 18-24 year-olds believe that they'll be able to have the lifestyle they want in retirement, compared with just 23% who disagree. However, this level of positivity seems to change between the ages of 35 to 44, and from this point onwards respondents were far gloomier about their ability to set aside enough money.
In fact, confidence reaches its lowest level among those aged 45-54, when 39% of people believe that their preferred retirement lifestyle is out of reach. This suggests that many of those approaching retirement are actively struggling to plan effectively for their future, with the practicalities of saving sufficiently starting to hit home.
Preparation, and planning early, really is key when it comes to retirement positivity: 58% of pre-retirees who are actively preparing for retirement are confident that they'll have the lifestyle they want, compared with just 18% who aren't preparing at all, a trend that can be seen regardless of household income.
However, it seems that the reality check pays off in later life, as by the time people approach their mid-50s they begin to feel more optimistic about life after work. The figures showed that, of those aged 55-64 years-old, 50% are taking (or have taken) active steps to prepare for retirement, with 43% agreeing that they'll be able to have the lifestyle they want, compared with 29% who disagree.
All that planning could come to fruition, too, with 77% of retirees who made active preparations saying that they're living the lifestyle they want, compared with just 43% who didn't prepare. They're also more likely to believe their retired years are the 'best days of their life' (48% compared with 29%) and to say their standard of living is as good as, if not better, than that of their parents' generation (83% to 54%, respectively).
Jacqui Bateson, retirement specialist at Skipton Building Society, commented on the findings: "Retirement is a rapidly growing concern as people are living longer and will need more money for later life. We've identified that there is a clear period from 35 onwards when people can see the future realities of retirement in years to come, but can't see past their immediate concerns and financial commitments, such as children and mortgages.
"However, we can also see that the best solution is not to put your head in the sand, but to take action. Planning for life ahead is not just a financial matter, and addressing some of the fears we might have about later life can be helpful to put to rest those nagging doubts."
Start planning! It's never too early to get prepared, and one of the first things you need to do is sign up to your company's workplace pension scheme. You may want to consider other options as well – such as a personal pension or an ISA/savings account to give you other savings vehicles – and if you're approaching retirement, make sure to seek professional advice, or at the very least contact Pension Wise, to give you an idea of how you can achieve your retirement goals.
Approaching retirement? Consider your income options with our annuity planner
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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