Your feedback is essential to help us improve - click here to take our 3 minute survey.

1 in 4 Brits worry about not saving enough for retirement

1 in 4 Brits worry about not saving enough for retirement
Image source: Getty Images

Although the pandemic made its mark on the nation’s personal finances, a recent survey carried out by Toluna reveals that Brits are generally optimistic about their financial future. However, 23% are worried that they’re not saving enough for retirement. If you’re part of the 23%, what can you do about it? Let’s take a look.

Those closer to retirement are particularly concerned

It’s understandable that as retirement draws closer, concerns about retirement savings seem to rise. The survey shows that 58% of those between the ages of 40 and 60 are worried that they won’t have enough for their golden years. The economic downturn is certainly playing its part, as investments are feeling the full force of volatile markets.

Tips to boost retirement savings

It’s tempting to go for investment assets that produce the highest return in the shortest amount of time. However, sound financial decision-making will go a long way.

  • Aim for long-term investing: It’s tempting to get your money out as fast as possible when the markets take a knock. However, if you still have ten years or more before retirement, you might want to think it through. Investing is for the long-term and moving funds during a market lull can jeopardise your capital. It’s wise to speak to a financial adviser to make sure that withdrawals or switches form part of your long-term investment strategy.
  • Investigate asset allocation: If asset allocation doesn’t form part of your annual investment review, it should. Your asset allocation in your retirement portfolio at 25 should look different to the allocation at 55. That is because your risk will adjust. When you get close to your retirement date, you should start looking at assets that preserve your portfolio.
  • Try not to make emotional decisions: It’s hard to invest for years and not worry about investments during market fluctuations. However, emotional reactions might jeopardise the opportunity to recoup any losses if they’re moved at the wrong time.
  • Find out what your options are: The closer you are to retirement, the fewer options you have. This is because investments are time-sensitive. Those that might make good returns, might be too high risk and put your capital in danger. It’s best to take a close look at your financial standing. Also, consider the time you have to make a difference in your portfolio. You may have to consider building other passive streams of income if the trajectory doesn’t meet your financial needs for retirement.
  • Increase your contributions: If you’re still a few years away from retirement and your budget allows bigger contributions, a low market is an ideal time to do this. See this as the markets having a sale and you buying up stocks at a discounted rate. Remember to consider your risk profile, a good asset mix and solid financial institutions before investing.

Why regular savings accounts are a poor choice

Knowing the inflation rate is important as it can affect your long-term savings. Michael Worledge, head of financial services research at Toluna, says, “There is no doubt, especially as some estimates suggest that the rate of inflation could hit 4% by the end of the year, that there is increasing pressure on the central bank to act and tame the rate of inflation.”

For those looking to give their retirement savings a boost, it’s worth knowing that savings accounts don’t offer rates that keep up with inflation. Currently, major banks in the UK rarely award interest rates of more than 1% to 3% on savings products.

What this means is that if you’re looking at a regular savings account as a long-term solution, you’re effectively ‘losing’ money as it doesn’t grow with inflation.

Rated 5 stars out of 5 by The Motley Fool UK

Trade UK shares for just £2.95 and US shares for just $3.95 — with no platform fee!

The FinecoBank* Multi-Currency Trading Account offers UK investors highly competitive share-dealing rates across 26 global markets. Open your account using promo code TRD500-ML and during your first 3 months you can trade without incurring commission charges – up to a total commission amount of £500. (Terms and conditions apply.)

*Affiliate Partner. Important information and risk disclaimer: The value of shares and any income produced can fall as well as rise, and you may get back less than you invest. Exchange rate fluctuations can reduce the sterling value of any overseas holdings.

Was this article helpful?

Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.