Many UK adults have not prepared for their financial futures, according to a new study by UK’s leading price comparison website.
MoneySuperMarket surveyed the British public to determine UK savings and find out how they are preparing for the future – and revealed that a third (33%) of UK adults have no idea how much they have in their pension pot.
The results found that many Brits have not made provisions for their dependants after they pass away or even started planning for their finances in later life.
Of all those who were surveyed just 42% declared they have life insurance arrangements in place – 9% more than in 2018.
However, shockingly, almost half (46%) have claimed they are not planning on taking out life insurance, even though it is one of the best ways to get rid of debt and provide provision for dependants following the death of a policyholder.
Furthermore, the statistics reveal that the majority of Brits (92%) have no awareness of the amount needed in their pension to live comfortably and debt free later in life when they reach retirement age.
With the average pension pot requiring £298,000, data from the millennial (18-34-year-olds) cohort indicated a lack of knowledge and awareness about pension arrangements and future planning – as 62% totally underestimated the amount of money needed to live a comfortable retirement – and 16% thought they only needed £50,001 – £100,000.
According to research by MoneySavingHeroes.co.uk over half of the UK population are baffled over the pension system and do not understand how pensions work, when they can access their money and how their money would be paid to them.
The respondent findings revealed that the UK State Pension would be nowhere near enough to live on in their old age with 46% concerned that it would not get anywhere close to covering their monthly outgoings.
At a time when UK adults are not prepared or have no awareness for future financial planning, coupled with those who are paying too little into their pension pots – this could seriously impact on their quality of life after they retire.
In addition, only 42% of all respondents said they are saving for retirement, yet for 18-24-year olds buying their first home is top of their list, with 58% saving for a property.
With only 42% saving for retirement, last month research from Aegon found that the number of women who have not enrolled into a pension continues to dramatically widen – nearly doubling from 7% in 2017 to 13% in 2019.
Again, analysis of the Aegon research found one of the main reasons for the pensions gender gap is a complete lack of pension awareness, along with the criteria involved in auto-enrolement.
Rachel Wait, consumer affairs expert at MoneySuperMarket, commented:
“Brits face all sorts of calls on their money and it’s easy to see why the cost of everyday living can trump longer-term objectives such as saving for retirement – especially if you’re not fully aware of how much you’ll need in retirement. But anyone who can get into the savings habit gives themselves a better chance of building up the sort of pension kitty that’s needed to fund a comfortable lifestyle once they stop work.
“Anyone who has dependents should consider life insurance in order to ensure financial security for their loved ones. Policies can be set up to pay off a mortgage and other debt, as well as help provide money to meet the day-to-day financial needs of those left behind if the policyholder passes away. As a result, it’s important that people take the time to look for a policy that’s best suited for their needs.”
The lack of awareness and poor preparation of later life planning and retirement means that UK Brits could end up sleep walking into retirement – which will dramatically affect their general well-being and comfort when they reach retirement age.
