A survey of preparedness for retirement by Legal and General suggests almost half of millennials don’t have a retirement plan in place; while at the other end of the spectrum only one in five baby boomers regard leaving an inheritance as a top five retirement priority.
Despite this, more than three in five millennials (62%) worry about the prospect of having to return to work once they retire with 58% say they know of friends and family who have had to do so, with a further 78% admitting they would feel frustrated if their future self didn’t have enough savings in place.
The survey also found those aged between 28 – 44 yrs old are simply much less prudent than previous generations when it comes to planning for the future. 12% of respondents currently having no money saved for when they retire, while 36% don’t know what their monthly pension contributions are.
And despite hopes for inheritance, research from Just Group suggests only one in five baby boomers. the generation born after World War II, generally between 1946 and 1964, say leaving an inheritance is a top-five retirement priority.
20% of 60-78 years olds asked said leaving an inheritance was one of their top five retirement goals, although it’s notable a significant minority did identify helping children and grandchildren with their finances (18%), sometimes called a ‘living inheritance’, as important.
GenVoices, an in-depth consumer insight programme from Just Group researched attitudes and experiences and attitudes of Baby Boomers.
Spending more time with family and friends was the top objective, selected by 46% of respondents. Next were travel abroad (37%) and travel in the UK (36%) and to pursue new hobbies and interests (34%). Only 3% of current homeowners envisaged buying a different main home while 20% said they wanted to renovate their own home. Among renters, 4% wanted to buy a home.
Overall, 4% chose moving abroad and the same proportion chose study/education, 1% wanted to start a business and the same proportion planned to buy a property to rent out.
Commenting on the findings Stephen Lowe, group communications director at the retirement specialist, Just Group, said
“Inheritance and estate taxes are hot topics, but the research suggests that leaving money is not high on the retirement agenda of most Baby Boomers. Even among the oldest in this group – those aged 70-78 – and those on the highest household incomes (£100k+) still only about a quarter put leaving cash as one of their top priorities. Almost the same proportion (18%) who want to leave an inheritance say they want to provide financial help to children or grandchildren while still alive.”
“Overall, the priority of most seems to be to kick back and relax by spending time with friends and family or pursuing travel and hobbies – over other options such as working part-time or volunteering, setting up their own business or studying.”
He said that although Baby Boomers are often seen as the most financially privileged generation, the research suggests an awareness among most of this cohort that they have finite resources that will mostly be used up during their remaining lifetime.
“Longevity increases during their lifetimes mean they face more years in retirement, which translates into higher costs, particularly if they need professional care later in life. While about 70% own their homes, around one in seven of this group still have mortgages. Many of the non-homeowners will face paying rising rents over time.
“The wealthier tiers are quite comfortable, but the bigger picture runs against the common perception that Boomers are awash with dosh. The reality is that most Boomers are going to need to be careful with their cash and probably feel leaving money is a hope and not an expectation.”
