Many people working today face a huge challenge when it comes to planning and saving for their financial security in retirement. Using our Phoenix Insights Longer Lives Index data – a survey of 16,500 people aged 25 and over who aren't yet retired - we explore the adequacy and achievability of people’s retirement income expectations and look at how financial preparedness can be better achieved.
Are people's retirement income expectations adequate and achievable?
An expected income in retirement of less than the PLSA minimum retirement living standard.
Expected to receive at least the PLSA's minimum income but perhaps not on track to achieve it.
Look on track to receive at least the PLSA's minimum income but insufficient to maintain pre-retirement living standards.
Undetermined expectations of income in retirement.
Look on track to receive above minimum income in retirement and able to maintain pre-retirement living standards.
To get on track to reach retirement income targets, some individuals might need to increase the percentage of salary saved (to 12%) and work longer than planned (to 68). But our modelling shows that this approach mainly benefits middle and higher earners. Why? Because increasing your savings can be challenging, particularly in the context of high inflation, and working for longer just isn't possible for everyone. Our findings show that nearly four in ten people worry about working for longer because of the impact on their physical health.
Our report highlights the importance of understanding people's expectations and whether and how they can enjoy the retirement they've been planning for. Future policies must take into account the fact that for many there seems to be a mismatch between expectation and likely reality.
Joining Catherine Foot, Director of Phoenix Insights to discuss the Great Expectations report were: