Global savers concerned about day-to-day living costs in retirement

Smart, the London-headquartered fintech disrupting the global retirement savings market, has published its annual Future of Global Retirement report. This year’s report looks at how knowledge, attitudes and concerns about retirement savings have progressed. The report includes findings from more than 8,000 savers across the UK, Australia, South Africa and the US.

Although the retirement landscape in each of these regions differs vastly, the report identifies some common trends. Understanding of pension options remains low across the four countries surveyed. Men and women have different perceptions of both decumulation and retirement. There are also concerns, expressed by respondents across geographies, around being able to afford basic living costs in retirement.

Key findings from the report include:

• Being able to afford day-to-day living costs in retirement is a key concern among all the regions surveyed – 34%, 57%, 60% and 68% of respondents in the UK, US, Australia and South Africa, respectively, said this was a concern.

• One in five UK respondents aged 18-25 are concerned about being able to afford accommodation in retirement, compared to just one in ten of their 65+ year old counterparts. And 38% of women who responded in the UK are concerned about having enough money for day-to-day living expenses in retirement, compared to 31% of men.

• More than half (57%) of UK respondents plan to supplement their pension with other forms of income. 18% expect to do so through continued employment.

• 29% of UK respondents say they “don’t understand” the pension options available to them in retirement, the least understanding amongst the four countries polled. Even 19% of those aged 55+ say they do not understand their options.

• Despite this – or perhaps because of it – UK respondents are also the most keen to manage their own retirement savings single-handedly; 38% want to do so, compared to 24% of Americans.

• There is a gender imbalance across all geographies. Women tend to be more concerned about healthcare and living costs in retirement than men. Women also feel less confident about knowing their retirement options, and are more likely than men to view retirement as a transition than a one-off event.

Dan McLaughlin, Director of International at Smart, said:

“With the global retirement market worth $62 trillion, we’ve looked at how attitudes towards retirement and saving for later in life have changed. Given the rising cost of living, it’s not surprising that savers are increasingly concerned about being able to afford day-to-day expenses in retirement. This makes Smart’s work even more important as we help people towards better financial futures across the globe.

Smart will continue to be informed by the needs of retirement savers across the globe, particularly as these markets develop and mature as we aim to solve the biggest challenges facing the industry. We hope to build on these findings and continue to shape the retirement landscape for the better, through technological solutions that have savers’ wellbeing at their core.”

Eve Read, Senior Director of Strategic Delivery at Smart, added:

“In the decade since the introduction of auto enrolment in the UK, we’ve seen millions of people saving for retirement for the first time. However, despite the initiative’s success, millions still feel they aren’t saving enough into their pensions. In some cases, this is due to working part-time, being in lower-paid jobs or simply opting out of the auto enrolment scheme offered by their employer.

Young people and women are particularly concerned about meeting day-to-day living costs in their retirement. We will continue to push for and implement changes that will tackle these savings gaps and inequalities effectively. It’s critical that we continue to develop solutions aimed at changing the retirement landscape for the better, particularly for those who face the greatest challenges.”

Click here to view the full report.