Not only are a large portion of Britons not saving retirement, but they are also underestimating how much they’ll need to save when and if they eventually get started, according to research from BlackRock.
According to a survey conducted by the investment management company, 40% of Britons have not started saving for retirement, and only 13% say they feel confident they will have the income they hope for in retirement. Meanwhile, their confidence in making the right savings and investment decisions has dropped 10% since late 2015.
“Britons are split down the middle in their outlook, with just over half saying that they feel positive about their financial future,” said the report, adding that they “are marginally less positive than in 2015, with the cost of living and the state of the domestic economy being key areas of concern.”
The high cost of living remains the top concern, cited by 56%, while the state of the economy was their second-biggest concern (46%), which has risen since 2015. Inflation worries also showed a significant rise since 2015.
The survey also found that Britons were underestimating how much they’ll need to save to produce their desired retirement income. On average, they said they believe that a pot of £233,000 ($312,000) will be enough for retirement income of £26,000. But according to BlackRock, they would need to save at least £525,000 for this income, even including the state pension.
The results also showed that, on average, UK citizens hold approximately 69% of their investable assets in cash, where it earns little or no interest. However, it also found that four in 10 Britons have considered investing some of their cash during the last year.
Despite the lack of retirement planning, the survey found that eight in 10 Britons place an especially high emphasis on themselves as being responsible for financing retirement. It also found that the main reason they would begin to invest more for the long term would be if they received a pay raise. Tax incentives and lower outgoings were second and third.
Among Britons who are seriously considering investing more of their cash, their most common reason for doing so is because they expect interest rates to remain low, followed by a recognition that investment returns are typically better than cash returns over the long term. The most common reason Britons are not investing more of their cash – six in 10 say they are not considering investing more of their cash – relates to risk-aversion. The second most common reason is the belief that they would invest so little cash that it wouldn’t be worth it.