4 days Ago By Anusha Mittal
The ways in which we spend our later lives are radically different today than in previous decades. From travelling and finding new hobbies to completing further education, working part-time or starting a business, people are not only living longer, but lifestyles are becoming more active and varied. However, financial preparations for later life are not keeping pace with this cultural shift.
At M&G our research has found that more than half (59 per cent) of Scots who have not yet retired say they are not saving enough money for retirement. There’s a very real risk that a ‘too little, too late’ generation becomes the norm – a cohort of savers who are unprepared for the financial demands of later life and whose reality is unlikely to meet their aspirations. This unpreparedness is partly due to affordability and a lack of knowledge about financial planning.
However, the fact that later life is not currently being portrayed in a realistic or aspirational way – and is not reflecting how people’s lifestyles have changed – is creating another barrier. A majority of Scots (55 per cent) find the way retirement is written, talked about or portrayed to be uninspiring and, two months ago, the influential Women and Equalities Commons committee found that ageist stereotyping is still “highly prevalent” in the UK. We need to change the conversation and tackle outdated stereotypes, enthusing people about later life and showing them a more realistic and exciting version of what this chapter could look like.
We believe that a more accurate portrayal will encourage people to proactively plan for their financial future, showing them the importance of investing to live the quality of life they want. There are three steps we can take: First, we need to investigate the impact portrayals of later life have on deterring or motivating people to take action. M&G is tackling this by examining existing portrayals of later life to consider what changes could encourage more people to engage with their pension.
Second, we need a clear roadmap on the future of auto-enrolment contribution rates. Our research found that nearly half of Scots who were surveyed (48 per cent) have never voluntarily increased their pension contributions. Tackling under-saving in workplace pensions, with consideration given to targeted support for lower income groups, is essential if the industry is to better support people to take action to meet their financial goals.
Third, too many feel overwhelmed to make long-term financial decisions. We need to give people greater financial confidence to put their money to work. A review of financial education provision should examine how well-equipped school leavers are to understand basic principles related to pensions savings.
Getting this right can help more people to feel comfortable in seeking financial advice, guidance and targeted support. A national reset on how the UK discusses later life and how to prepare for it is well overdue. By talking about retirement in a different way we can empower people to plan with confidence, improve contribution rates and feel positive about their future.
Anusha Mittal, Managing Director of Individual Life and Pensions at M&G.
