How well will your pension stack up?
WHEN struggling on a low income – maybe with a family to support – it can be tough to decide when exactly to start saving for retirement.
Young people who chose to go to university or college are often left with thousands of pounds worth of student debt and rising house prices increasingly seem to be forcing consumers to take out mortgages several times more than their salaries.
A recent report by the insurer Axa claimed that a typical British person starts planning for their retirement at age 28, while in China the average citizen waits until they are 37 before saving for their old age.
Yet a different survey by market research company TNS revealed that 90 per cent of UK adults are unhappy with the amount of money they save.
It suggested that the priority people identified in household finance was paying off debts on loans and credit cards, while just a fifth marked saving for retirement as a priority.
Financial advisers in Northampton have said that, despite claims that 28 is the average age of starting to plan for retirement, most of the clients they have advised on this issue have been older than this.
They said a major obstacle to people being able to save for their futures was rising debt on credit cards and loans.
Robert Butler, of the St James's Place Partnership, who operates from an office in Billing Road, Northampton, said: "Most of the people are over 45, unless they are in very good jobs, and they are not under 35.
"Those under 35 are probably paying mortgages and bringing up their children and those over 35 may have got themselves into a position of better financial security."
Sharon Rees, UK head of TNS Finance, said: "Cutting debt – whether from loans or credit cards – will often dominate any family's financial agenda.
"However, this must not come at the expense of planning for the future and we are pleased to see that people are exercising some financial control through a rigorous commitment to controlling household costs.
"Keeping close tabs on outgoings down to within 50 is not an easy task if you consider the range and variability of expenses we all face.
"What is concerning is that this control doesn't appear to have a pay-off. People are still not left with enough to put in the bank, explaining why few are genuinely satisfied with how much they can save or invest."
Mr Butler said he would advise people to start as soon as possible when it comes to saving for retirement, and not to delay.
He commented: "The Government is working to increase the pension age but people aren't starting to save until they are 35 years old. If you start at 20 it is realistic that you might be ready to retire at 60 or 65."
He said as well as signing up to a pension scheme, putting regular amounts of money into a high-interest ISA account is one sensible option when saving for the future.
He added: "People should be getting their debts under control first. A lot of people have got debts on credit cards and they appreciate they can't start out saving for the future with debt.
"It is not unusual to be seeing 20,000 or 30,000 worth of debt on hire purchase and loans on top of a mortgage four or five times a person's income. They are not in a position to save for their future. There needs to be a serious reality check."
Ian Lambert of 5 Point financial planning company in Weedon agreed that debt was an increasing obstacle to the ability to save.
He said: "A lot of people are pulled back by short-term debt on credit cards or personal loans."
He added: "Between 35 and 50 there are surprisingly high levels of debt. There are a generation of people who have grown up with credit cards and are probably still reliant on them. Youngsters are often more sensible with their credit cards."
He explained that older people are often remaining in debt to help their children, either paying for student expenses or remortgaging their own houses so their youngsters can get on to the property ladder.
He commented that more people were now choosing to buy to let as an investment for the future.
Steve Folkard, head of pensions and savings policy at Axa, also said: "Homeowners have limited options for generating earnings from the property they live in. Many people don't take into account how emotionally attached they can become to a family home.
"By the time they retire, people often don't want to move away from their friends and family or rob their children of their inheritance by handing over their home to an equity release company.
"This can scupper plans to take an income from the equity in their home."
Mr Lambert said that however people chose to save, they should be starting as early as possible.
He said: "The classic phrase is that 1 invested for the longest is worth a stack of money when you retire."
Email to a friend
Print this page- BREAKING NEWS: Man dies following motorway smash on Northamptonshire border
- BREAKING NEWS: Police inundated with hundreds of complaints over snowball fights
- Huge cigarette haul by masked burglars in armed raids at Northampton stores
- BREAKING NEWS: Police name man killed in crash on motorway in Northamptonshire
- Student flats planned for Northampton town centre revealed
- BREAKING NEWS: Fishmarket art gallery offered new home
- Student flats planned for Northampton town centre revealed
- New manager of Northampton’s Grosvenor Centre says ‘This is the beginning of a new era’
- BREAKING NEWS: Police inundated with hundreds of complaints over snowball fights
- Neighbours raise concern about bid to build new house three inches from their home
- Exclusive: Saints voluntarily move key Heineken Cup match to Milton Keynes
- Bird’s hilarious take on village life absurdities at comedy club
- Northampton commuters blast railway fare rises
- Sooty may be left with bullet in neck following senseless attack
- Ashton determined to end Saints career on a high
Looking for...
Featured advertisers
Jobs
Search for a job
Motors
Search for a car
Property
Search for a house
Weather for Northampton
Friday 10 February 2012
Today
Sunny spells
Temperature: -6 C to 1 C
Wind Speed: 13 mph
Wind direction: South east
Tomorrow
Sunny spells
Temperature: -5 C to -0 C
Wind Speed: 7 mph
Wind direction: South east
