We are pleased to share with you our latest Tackling the Savings Gap research that covers UK personal savings and debt data for Q4 2014.
This quarterly barometer, one of the largest surveys of its kind, of over 2,000 UK adults of all age ranges, socio-economic backgrounds and from all corners of the country, shows the levels of confidence that people have in their finances, how much they are saving and how they are choosing to save.
Highlights of our findings:
- People’s understanding of the word ‘risk’ may be costing them a £140,000 return on their investments and see them fall short of the standard of life they expect in retirement.
- Savers have said that they would need £23,000 as an income per year in retirement to enable them to live comfortably. That would require a pension pot worth at least £460,000.
- Savers cite risk as the greatest factor influencing their decision on where to invest.
- 62% of savers identify themselves as being defensive or cautious investors, with only 6% saying they would select a fund designed to deliver capital growth.
- On average, British savers are putting £238 per month toward their retirement. If this were invested into a balanced portfolio over a 45-year working life, it could achieve approximately £510,000. If the same £238 per month were invested into a cautious portfolio over 45 years, the projected returns reduce by £140,000 to £370,000. That’s below the £460,000 savers need for their planned £23,000 pension income.
This edition of Tackling the Savings Gap will be the last one before April’s pension freedoms are introduced. We will have to wait some time to see the effects those changes will have, but there are reasons to be optimistic.
The Savings Gap is still very real and as wide as ever, so no one should become complacent. The key is taking control and making informed choices. To help, we are offering a free personal finance course, Managing My Money, through the True Potential Centre for the Public Understanding of Finance.
Your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Past performance is not a guide to future performance. Tax rules can change at any time.