UK savers’ biggest financial fear is not having enough money for retirement, yet they devote most effort to saving for holidays according to research we conducted earlier this year.
Four in ten (42%) savers’ biggest financial fear is entering retirement without significant savings. Contradictorily, 40% of savers were most focused on saving for holidays.
This is at a time when the value of the pound has dropped and, according to the Daily Mail, individuals could see an increase in the cost of their European summer holiday. If an individual were to convert £1,000 this is now worth over £60 less than it was last month.
Pensions seem like a pipe dream
Many savers are choosing to bury their heads in the sand over saving for retirement. Poor performances, unnecessary charges and a lack of transparency within the financial services industry is putting savers off from investing for retirement.
Failure to save for retirement will impact savers’ quality of life in later years. The financial services industry needs to do more to encourage savers to prepare for retirement by offering products that are both low-cost and transparent.
The wealth management industry needs simplifying in order to encourage longer-term saving. Partly because of the service provided by the wealth management industry, consumers are too focused on saving for holidays and cars and not enough on the bigger issues like retirement.
Many savers want to start planning for retirement in their 20s and 30s – but don’t know where to start. As a result, savers look at more immediate targets, such as saving for a holiday.
Advice could help refocus savers
The industry needs to address the issues that dis-incentivise long-term saving. It is important that savers consider their future from as early on as possible and financial advice can be invaluable in helping manage this effectively.
At present, whilst there are strong benefits to professional guidance, there is a worry that there are unnecessary fees from financial advisers.
Some savers are still concerned that a financial adviser’s guidance would be biased towards generating commission fees. This is a worry for 81% of savers and another factor leading to savers’ reluctance to invest in the long-term.
With the technology available to us today, there is no excuse for the financial services industry to not provide investment products that are top quality, user-friendly and, crucially, low-cost, to help savers start thinking ahead.