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Almost one half of UK adults saving nothing towards retirement

Almost 50 per cent of UK adults are currently saving nothing towards their retirement, a recent survey has found.

9 July 2012

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New research from the Equity Release Solicitors’ Alliance (ERSA) revealed that 46 per cent of those surveyed are currently saving nothing at all and 32 per cent are saving less than £250 a month.

ERSA surveyed in June 1,113 UK adults about their finances and found that 38.6 per cent of 45-54 year olds currently saves nothing towards their retirement. Other age groups did not fare any better, with 42.9 per cent of 35-44 year olds and 47.2 per cent of 25-34 year-olds currently also not saving anything.

ERSA says that the figures show that the general public is “burying its head in the sand” over how much they need to save to fund themselves in retirement. The equity release specialists claim that at current rates people need a lump sum of around £200,000 to generate the UK average net annual retirement income of £16,332 (or a net monthly income of £1,361). But just one in four respondents think they will be able to save this amount before they retire.

Claire Barker, chairman of ERSA, said: “The findings demonstrate there is a huge lack of awareness over how large a lump sum is needed to fund a retirement income. This is causing people to drift into retirement without adequate funding. While more work still needs to be done to educate consumers about retirement planning, the good news is that the more informed people are, the more likely they are to consider using the equity built up in their home to fund their retirement.

“With three quarters of people not sure they will be able to save enough to live comfortably in retirement, they will need careful independent financial advice as to their options.”

Of those surveyed, 16 per cent said they they would definitely use equity release, or are quite likely to, as a means of tapping into funds, rising to 34 per cent when the survey sample was presented with the figures above.

A willingness to consider an equity release mortgage is highest among younger age groups (54 per cent of 16-24s and 39 per cent of 25-34s).

Claire Barker said: “There is a clear benefit to engaging with retirement planning sooner rather than later, but attitudes towards equity release are increasingly positive.

“The younger generations are less confident they will be able to save enough to live comfortably in retirement and are more receptive to equity release, but the numbers of people approaching retirement with inadequate savings is still worryingly high.”

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