Similarly, ceasing pension contributions to pay for the here and now or withdrawing pension funds if someone is over 55 are concerns for financial advisers.
Young people can feel as though they have to choose between doing the right thing for their future financial wellbeing (generally defined as saving into a pension and getting on the housing ladder) and enjoying life. However, unless they are in line for a deposit from the bank of mum and dad (or grandma and grandpa) or an inheritance windfall, the onus is on the individual to make these tough choices.
Our research shows that many younger people we surveyed are displaying ostrich tendencies, which is forgivable given the scale of the task, but undoubtedly storing up problems for later in life, which could be made worse by an ageing population and a crisis in social care.
In 2019, the Pensions and Lifetime Savings Association (PLSA) set out ‘retirement standards’ to reveal how much money savers need to maintain their lifestyle in retirement.
The trade association said that it hopes the standards will be understood in the same way being told eat ‘five a day’ encouraged fruit and vegetable consumption.
The PLSA’s research revealed the minimum a single person needs a year is £10,200 and for a couple that increases to £15,700. But for those looking for a more comfortable retirement, individuals need £33,000 a year and couples need £47,500.
Calculations are based on FTSE All Share (GBP Total Return). A bear market is defined as a price decrease of more than 20%. A bull market is defined as a price increase of more than 20%. The plotted areas depict the losses/gains ranging from the minimum following a 20% loss to the respective maximum following a 20% appreciation in the underlying index. Time period: 31 January 1900 to 31 December 2018. Calculations based on monthly data. Logarithmic scale on y axis.
Source: Global Financial Data.