An overwhelmingly large proportion of those approaching UK retirement age risk facing an underfunded retirement as they are either unwilling or unable to increase contributions to their retirement savings, a recent study has found.
In conducting the study, Friends LIfe found that 88% of those asked have never considered increasing the contributions to their retirement savings as they get closer to retirement.
Only one quarter of those asked said that they felt that they had saved enough for their retirement throughout the entirety of their working life.
In contrast, over one third, about 35%, said that they feel that they do not have enough saved to ensure a comfortable retirement.
Instead of stepping up retirement contributions in accordance to pay rises and a nearing of retirement an overwhelming majority of 62% have never increased their contributions. Instead preferring a ‘slow burn’ approach to their pension savings.
However, aside from an unwillingness to commit more of their disposable income, many questioned said that they had in fact contributed the most that they could feasibly afford.
Colin Williams, from Friends Life comments:
"Difficulty in finding money to start contributing to a pension earlier in working life is not a new problem. Our latest research found that just 25 per cent of over 50s still in work believe they did enough in their 20s, 30s and 40s to provide a comfortable retirement.”
With regards to geographical divides, it would appear that those in the East Midlands are the most proactive towards their retirement income, with an average increase in contributions of 15%. This is above the national average of 8% recorded within regions such as London, the North East, North West and West Midlands.
It would appear that men, on average are more proactive in increasing their contributions as they near retirement. The study found that 68% of women have never increased their contributions, compared to 53% of men.
The figures from the study, suggest that a large proportion of UK residents are not adequately preparing for their retirement. With annuity rates at an all time low, many are finding that their savings are not providing the income many hope to achieve. Therefore, many will find that saving as much as they can responsibly afford has rarely been more important.
Williams went on to say:
“At 50 years old many workers still have 15 or more years left to work, and increasing contribution levels at this age could make a significant impact on the size of their pension pot. Keeping track of pensions built up throughout their working career will also help workers understand their collective pension position, and using tools and forecasters they can make informed changes to their contributions to help increase their final pot size to better meet retirement needs."