Moneyfarm today launches a campaign that uncovers the “mid-life opportunity” – a window of time created by easing family pressures and cash windfalls that can help savers more efficiently and effectively reach their retirement goals.
By raising awareness to the mid-life opportunity, we aim to empower savers with the education, advice and tools to ensure this window of opportunity is not wasted or ignored.
Being able to identify and make the right financial choices during this window will ensure your dream retirement goals become reality.
The mid-life opportunity point
The research found that between the ages of 35-55, family pressures are the main barrier preventing those surveyed from saving for retirement (19%). However, when looking at the amounts spent supporting family members annually, the average person spends up to £8,300 less by the age of 55 than they did between ages 35-45.
When this cash is reallocated to a Pension, those investing can begin to make big strides towards achieving their retirement goals. For instance, someone aged 45 looking to retire at 66 could benefit from extra income in retirement of up to £9,831 a year[1] by investing these savings in Moneyfarm’s P7 portfolio.
In addition to family members becoming less dependent, there’s evidence that other opportune moments, which help people achieve their retirement goals, arise as they enter new life stages.
As children leave home and forge their own paths, 14% of those surveyed plan to move into a home more suited to their needs as they near retirement, while 19% said the extra time means they can work a part-time job to help give a boost to their retirement fund.
Considering those aged between 55 and 64 are also the most likely to receive a big windfall of inheritance money, the mid-life opportunities presented to this group to begin realising their retirement goals are substantial.
Meanwhile, it was found that almost half of those surveyed (48%) have no idea what the cost of achieving their retirement goals is. Of those that did know, it was estimated that they would need to save an average of £27,213 to reach these goals. For a 45-year-old looking to retire at 66, this is the equivalent to investing £82.58 extra monthly in Moneyfarm’s P7 portfolio, whereas a 35 year old could stand to benefit even more, needing to invest just £48.83 extra a month.
Despite this mid-life opportunity, nearly a third (30%) say they are not saving for retirement at all, with four in ten (40%) saying they do not know where to start when it comes to saving enough to reach their retirement goals.
Achieving retirement goals
When looking at what specific goals Brits want to achieve in retirement, travelling the world (34%) topped the list. This was followed by looking after family (29%), volunteering in the community (17%) and making new friends (15%). As well as being the most popular, travelling was also found to be one of the most expensive retirement goals, estimated to cost retirees £22,047 on average.
Despite this, travelling in later life is becoming increasingly common, supported by recent figures showing the number of over 65s travelling abroad rising by 35% over the last 20 years.
Aiming to help those planning for retirement with simple financial know-how to achieve their goals, Moneyfarm has partnered with travel guru and broadcaster Andy Mossack, who is Editor of TripReporter.co.uk, to give an expert view on how to make the nation’s most desired retirement goal a reality.
Andy’s advice for those set on travelling the world in retirement is:
1. Choose a method of travel that suits you:
· Interrailing for adults can be done in style. For instance, unlimited 1st class travel across 31 countries stretching from Portugal’s Atlantic coast to Turkey’s Asian border within one month currently costs just £759.
· If you’re looking at embarking on a cruise, make sure that the all-inclusive offer includes all meals, drinks, excursions and tips. Cruises can be pricey but can turn out to be excellent value in the long-run.
2. Take the path least travelled:
· The UK has suffered with exchange rates in Europe and the US over the last few years but there are many destinations where sterling remains strong. Destinations such as South Africa, Vietnam, Argentina and parts of eastern Europe such as Romania and Bulgaria for example can make your pound go a lot further.
· The beauty of retirement is that you’re not forced to take holidays at certain times of the year. Peak-times are always the most expensive and there are many savings to be found visiting a country off-peak. A good example is the Caribbean which is always seen as just a winter sun destination. The truth is in our summer it may be their rainy season but that normally means a short strong shower in the afternoon, while the temperatures are still perfect. Be travel-wise and you can save considerably.
3. Be savvy when you choose your destinations in-country:
· There can be huge variations in price depending on which regions of a country you pick. The south of France is an excellent example. The French Riviera is a wonderful destination and Nice, Cannes and St. Tropez may well be on your bucket list. However, the truth is they are often crowded and pricey. Further west in the Languedoc region you’ll find the same coastline with much better beaches for much lower prices and far less people.
· The same situation for Italy and Amalfi, which is another stunning location but very crowded in summer. Head instead to the Cilento coast which is about a 30 minute drive further and you’ll see prices fall dramatically as well as the number of tourists. A much better experience all round.
4. Invest in your retirement travel goals now:
Travelling the world can be a hugely rewarding experience, and if you make the right financial decisions now, it’ll make this goal a lot easier to achieve.
The mid-life opportunity, if handled with care, can help you make the most out of your retirement. So, whether you’re planning a river cruise down the Ganges or boarding the Orient Express from St Pancras, have the confidence to plan for your retirement and be reassured your goals are attainable.
How Moneyfarm can help
The research looked at what those aged 35, 45 and 55 would need to invest on a monthly basis to make their retirement dreams come true. For instance, someone aged 45 aiming to retire at 66 would need to make monthly contributions of £145 in a P7 Moneyfarm Pension to have enough to live a comfortable lifestyle and save enough to travel the world in retirement, the latter being estimated to cost £22,047. This amounts to £25.67 less a month than if they were to save that money in cash only.
Moneyfarm provides both guidance and investment products, aimed at helping you make better decisions with your money to achieve your dream retirement. It offers Pensions, Stocks and Shares ISAs and General Investment Accounts (GIAs), in which your investment portfolios are matched to your individual circumstances and goals.
Moneyfarm also has a team of investment advisers, who are always on hand to provide guidance and answer any questions.
For more information about the Moneyfarm Pension, and further help with achieving your retirement goals, please visit www.moneyfarm.com/uk/pension
[1] Based on a customer aged 45 making a contribution of £8,299.94 to a Moneyfarm P7 Pension over 11 years, and the average UK life expectancy being 81 years old
