Six in ten midlifers aged 45 to 54, equivalent to 5.2 million people, are taking action to increase their retirement savings, according to new research from Phoenix Insights.
According to a survey of 2,000 45–54-year-old workers across the UK, 18 per cent of midlifers have been cutting back on holidays and luxuries; 14 per cent have been increasing workplace pension contributions; 14 per cent have been increasing their personal pension contributions; 14 per cent have been selling items they no longer need; and 13 per cent have been setting up automatic transfers into savings accounts.
The top five sacrifices this group would consider making in the next 10 years to prioritise saving more include eating out and takeaways at 44 per cent, buying a new car at 35 per cent, a holiday at 33 per cent, Christmas spending at 29 per cent, and home maintenance or improvement 18 per cent.
The findings come as midlifers in the UK face acute challenges when preparing for retirement, with 63 per cent and 20 per cent respectively saying that the high cost of living and increased mortgage costs are making it harder to save.
Phoenix Insights reports that the average retirement savings in the UK for people between the ages of 45 and 54 is presently £88,000. However, according to estimates from the Pensions and Lifetime Savings Association (PLSA), this age group would need to save an extra £160,000 on average to maintain a reasonable standard of living in retirement.
In addition, 10 per cent of midlifers are considering selling their houses in order to increase their retirement funds. To improve their long-term savings, some are looking into alternatives like switching careers or taking on additional work.
Phoenix Insights head of research analysis and policy Patrick Thomson says: “Across the UK, we are grappling with how to make the most of our longer lives, including how we prepare and save for the years ahead. The challenge is clear, as only one in ten (10 per cent) of this age group believes they could live on the State Pension alone when they retire without cutting down spending.
“For those currently in midlife, often facing substantial financial and time pressures, it can be a critical time to take stock. Phoenix Insights’ research shows it’s also a time when many people are starting to take action, with 45- to 54-year-olds reprioritising their spending in order to save more, and some considering significant changes to their work and where they live.
“Everyone’s journey to and through retirement will be different, and it’s clear there is no one-size-fits-all for how those in midlife are saving and planning for this time in their life. As we are living longer than the generations before us, we all need to think differently about our futures, and the futures of those we care about. For many, this can be a challenging topic to engage with.
“Our research shows that nearly half (49 per cent) of people aged 45-to-54 find thinking about their finances is the hardest part of retirement planning. But with the support of those around you, we can all take the steps – large or small – to build a better retirement.”
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