Saving for retirement: Are you one of the UK’s super savers?

More Brits are saving for retirement now compared to two years ago, boosted by the government’s policy of auto-enrolment. That’s according to our Investor Pulse survey, which also shows that the number of 25-74 year olds putting money away specifically for retirement has risen by an impressive 28 per cent since we began the survey two years ago. To date, over 5.5m people have been automatically enrolled into a workplace pension. And sentiment continues to improve, too, with more than half of people feeling optimistic about their financial outlook, a 13 per cent increase since 2013.

 

But not all is rosy. Despite the painfully low interest rates available on bank accounts, we found that people still overwhelmingly choose to save in cash rather than other investments. The average Brit continues to hold over two-thirds of their wealth in the bank. And people also feel less confident about their financial decision-making – a possible result of increased choice and responsibility following pension freedoms. For the first time, less than half of people tell us they are confident, with particular lows among women (42 per cent) and 45-54 year olds (40 per cent). Individuals now have much more flexibility, but that seems to have had the side effect of increasing their anxiety. 

 

 

But away from the headline figures, what really sticks out this year is the gulf between different types of savers in the UK – or rather between people who save and people who don’t. While two in every 10 people saved more than £6,000 last year – a hefty £500 per month – three in 10 saved less than £600 across the whole year. 

 

We have identified a group of British people who (S)ave and invest more, (M)ake retirement a priority, (A)ctively invest, (R)ecognise the need to spread their investments, and (T)ake financial planning and advice seriously – SMARTs. Nearly one in 10 Britons, from all age groups and income brackets, is a SMART. They typically save and invest more than 10 per cent of their salary, hold no more than 49 per cent of their wealth in cash – and nearly half of them use financial advice. Among this group, eight in 10 feel in control of their financial health and future, compared to just five in 10 across the board.

 

Industry and government have more to do to encourage Britons to save and invest, and to close this gap. Some excellent suggestions include a digital passport to create a hub for financial activity online, a kitemark for financial guidance, and the establishment of a permanent savings minister role in government. But that doesn’t mean people should sit back and wait for these innovations to be introduced. As SMART savers and investors show, individuals still have the power to lay the foundations of their own future prosperity.