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The pension procrastination problem: why generation X is headed for a retirement dilemma


90% of 30-45 year olds yet to plan for retirement

Generation X is suffering from a widespread tendency to procrastinate when it comes to putting money aside for retirement, according to the results of a new survey of 30-45 years olds*.

Carried out by YouGov on behalf of Old Mutual Wealth, the research conducted with more than 3,000 adults shows that 90% have not started planning how they will fund their retirement*.

Among that large majority, the average age at which people felt they would start planning was 45, roughly 20 years before they might hope to retire.

But figures calculated by Old Mutual Wealth illustrate that planning earlier could leave them far better-off in the long-term.

Procrastination generation

On average, respondents across the sample expected to delay planning by around 8 years.

But analysed in greater detail, the data reveals a telling picture of procrastination that demonstrates the vast majority continue to put-off pension planning throughout their mid-life period.

Respondents aged 30 predicted on average that they would start planning in just under ten years’ time. Based on the predictions of those in their early 30s, there should be a gradual increase in the number of people that have actually gone ahead and put in place a plan by age 40.

Correspondingly, as people progress through their 30s, the projected delay before they start planning should narrow dramatically as they approach their 40s.

But, as the data below illustrates, the number of respondents that have actually formed a plan by that stage is still low, barely higher than the sample-average of one in ten. For example, just 13% of 44 and 45 years olds reported to have put a plan in place.

Table 1:

Table 2:

Across the respondents in their 30’s the expected delay until beginning to plan for retirement never falls below an average of 8 years. And it even increases during the mid-30s, indicating this age-group are even more inclined to prioritise other spending over pension saving (table 1).

It is only among respondents in their 40s that the trend reverses, with respondents shortening the number of years they expect to put-off planning.

But even at age 45, only 87% of the sample said they had actually started planning (table 2).

And for those that have not yet started, the average age at which they expect to make a plan remains several years in the future, with those age 45 expecting have a financial plan in place for retirement by the time they are 51.

The vast majority of respondents to the survey indicated they acknowledged a need to put in place a financial plan for retirement, with only 6% of those without a plan saying they never expected to put one in place. In other words, although 9 in 10 don’t have, 94% of that group acknowledge it is something they want to do.

The data illustrates that while Generation X realise the need to plan their finances for later-life, very few have actually done so. And more worryingly, although they have an age in mind to begin planning, the evidence suggests most are inclined to keep deferring until well into their 40s or even later.

Why is it worthwhile planning ahead?

While there is strong evidence that most people recognise there is a need to plan, the data illustrates that generation X have a tendency to delay.

But trying to make-up a savings gap as you come closer to retirement age can be challenging. This is because investors will lose some of the benefits of investing over time.

Table 3 shows the effects of investing over a longer period.

The calculations illustrate the pension savings pot that an individual contributing a total of £100,000 (including employer contributions and tax relief) and retiring in August 2016 would have had based on saving over 30 years, 25, 20 or 15 years.

In each case the total amount saved is £100,000, with the contributions spread equally over the time period over which they invest (e.g. ‘Example 1’ saves £277.78 a month over a 30 year period). The calculations are based on the real-world performance of the FTSE 350 over the last 30 years.

By starting saving in 1986 and spreading their contributions over a 30 year period, an individual could have accrued close to £400,000, significantly more than the final savings tally enjoyed by an individual that saved the same amount but started saving 15 years later. 

 Table 3:

Why is Generation X at risk?

Old Mutual Wealth focussed on this age group (30-45) due to concerns they are at acute risk of under-saving for their retirement.

Previous research from TISA shows 2035 is set to mark a tipping point when consumers aged 45 today will start entering retirement less well off than earlier generations.

This is due to a number of factors, including the decline in defined benefit pension scheme and changes to the State Pension to the Single Tier system. These factors and others are likely to mean reducing incomes by 2035 or earlier unless these is a significant uplift in savings in the interim period.

Generation X will also benefit less from the introduction of auto-enrolment. Workers in their 20s will benefit from saving for most, if not all, of their working life due to auto-enrolment legislation that mandates all employers offer staff a workplace pension, with minimum contributions set for both employer and employee. In contrast, while all employees will be affected by auto-enrolment legislation, older employees have fewer years remaining in work in which to accrue a healthy savings pot.

Paul FeeneyOld Mutual Wealth chief executive Paul Feeney says:

“For Generation X, retirement planning is on the ‘to-do’ list for most, but there is a worrying tendency to procrastinate and never get round to it.

“Many people want to delay pension saving and leave it for another day. It is easy to see why. Between childcare costs, school fees, travel costs, holidays, repaying the mortgage and all the other costs we face in our 30s and 40s, it can feel that there is simply no money left to save at the end of the month.

“Instead, people hope that tomorrow will be better and it will be possible to make up the difference. Unfortunately, that might not be possible for many, and trying to rapidly top-up your pension after years of under-saving is likely to end up more expensive over the long-term.

“The best thing to do is start planning as early as possible. Think about what kind of income you want in order to achieve your desired standard of living and then work backwards by projecting how much you’ll need in order to reach that target and finding a way to save toward that long-term goal. It may feel painful to start putting money aside in your 20s and 30s that you won’t access for decades, but putting a little extra aside is likely to yield a much happier retirement.

“Planning ahead for retirement is not easy. It is difficult to be plan objectively for tomorrow, because we are hard-wired to focus on the here and now.
Planning what financial resources you will need in the future is difficult and plotting a path to reach your goals requires real discipline. Speaking to a financial adviser is the best way to get re-assurance and peace of mind that you are on-track or, if you are looking at an income shortfall in retirement, to address the situation.


* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,009 adults. Fieldwork was undertaken between 14.07.2016 - 22.07.2016.  The survey was carried out online. The figures have been weighted and are representative of all UK adults aged 30-45.



For more information contact

Tim Skelton-SmithOld Mutual Wealth02380 916 99807824 145

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Quilter Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• The private client advisers business is now Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

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