Retirement Shock Kicks In When You’re 35

shockedIf you are around 35 years old a pensions reality check is about to set in and alter your perceptions about savings, according to a new survey.

At 35, you have reached the age when the concept of retirement and how much money you need to provide a comfortable income start to hit home.

Forget preconceptions about relaxing on endless holidays with cash to spend – for most retirement savers this will never happen.

Research by the Skipton Building Society found around four out of 10 aged between 18 and 24 believe they will have the lifestyle they want when they retire, yet only one in five of the age group understand how retirement finances work.

Retirement lifestyle expectations too high

Older workers with retirement on horizon in the 45 to 54 year old age group have concerns about how much they can save and feel they will never have enough cash to fund the retirement they wish for.

Somewhere in between, the survey suggests, workers reach an age where their rosy view of retirement fades away and the reality of having to save kicks in.

The building society’s Jacqui Bateson said: “Most people think about retirement in a financial context, but lifestyle expectations also play a part and influences the saving decisions they make.

“It seems around 35 years old, people can see they will need more money to fund their retirement than they first thought but fail to do much about it because their finances are tied up raising a family and paying off a mortgage.”

Perception gap over retirement saving

Other key findings from the report include:

  • 40% of retirees say lack of money affects their lifestyle, while 17% are in poor health which stops them doing the things they would like
  • 28% of those approaching retirement believe they can maintain their lifestyle after giving up work
  • 74% of retirees say their lifestyle is better than their parents enjoyed when they retired
  • 64% of retirees had a sufficient income to give up work when they reached retirement age

“We feel the research shows there is a perception gap between younger and older workers over how much money they will need to support a lifestyle at a similar level to the one they enjoy now,” Bateson.

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