Brits start saving for retirement at 28

A global study into retirement has revealed that, on average, Brits start planning for their retirement at 28 – 5 years earlier than the international average age. However, some people are still waiting until they are well into their 40s and 50s to think about their retirement income, leaving themselves in grave danger of not building up a sufficient retirement pot.

The latest study from AXA reveals that almost three in four (71 per cent) working Brits have started financial preparations for their retirement, much higher than the global average of 54 per cent. On average British workers began preparing for retirement at 28, six years earlier than those who have already retired did. Worryingly, almost one in three Brits (29 per cent) who have not started preparing for their retirement do not expect to do so until the age of 47.

However, despite some Brits lagging behind when it comes to pension saving, we are still ahead of the majority of our counterparts globally. On average, workers in France and Spain do not start saving for retirement until 34 and those in China and Hungary begin to build their pension pot at 35 and 38 respectively.

Life triggers for early saving

Several life triggers are influencing working Brits to start saving for retirement earlier than anyone else. The most common of these is joining a company with a good pension scheme (68 per cent). This is closely followed by getting married or having a serious relationship (45 per cent). However, a significant proportion of both retirees (35 per cent) and workers (43 per cent) said turning 50 is a major trigger to start saving – leaving it too late to generate a decent retirement income without substantial contributions.

Steve Folkard, head of pensions and savings policy at AXA commented: “It is encouraging to see that Brits lead the way when it comes to retirement planning but not surprising given that state benefits in the UK provide a very modest retirement income compared with many other countries. However, in spite of this, there are still a worrying number of people who have still not started saving into their pension. Young people today think retirement is far off and that pensions are something they do not need to worry about, yet figures do show that the earlier you begin saving the greater the benefits when people hit retirement.”

Securing retirement income

Of those that have started saving for retirement 61 per cent contribute directly through their company’s scheme, whilst 58 per cent are spurred on by voluntary contributions from their employer. Interestingly, and perhaps this is a reflection of the current pensions climate, the percentage of retirees that contributed via their employer or an employee contributory scheme was higher, at 70 per cent and 71 per cent respectively, suggesting that company pension schemes have a vital role to play in encouraging the savings habit.

The research also shows that people have found alternative ways to save for the future including opening personal pension schemes (45 per cent), putting money aside in equities and bonds (45 per cent) or investing in real estate or property (34 per cent).

Steve continued: “It is great to see that so many people in the UK see saving for retirement as a priority. However, it is worrying that against a background of declining employer provision, many are leaving it later to begin planning than they did before. The message is clear. Well supported employer provision remains the best way to encourage people to save for their retirement. Any measures which weaken existing employer provision will seriously undermine the retirement future of many of today’s savers.”