According to a recent study, the British are the worst in the developed world at saving for their retirement, with the average worker saving for around seven years of work-free life, when, in all probability, retirement will last for 19 of them.
The study found that the 12-year shortfall was the worst in the world, even though people in the UK are living longer, through tougher economic times. However, for some reason their expectations about their standard of living in retirement remain unchanged and one in five saves nothing at all, which was described in the study as “putting off the inevitable”.
Meanwhile, recent figures from Nest, the state-provided default pension scheme, showed that seven in 10 private sector workers do not currently pay into a retirement scheme.
The number of “active” pension savers in the UK fell from 12.2 million at the peak in 1967 to 8.2 million in 2011, according to the Office for National Statistics.
However, even for those who do save, the picture may be bleak, as the success of Government’s Funding for Lending Scheme (FLS) is hitting savers, as rates continue to be lowered because best-buy deals keep being pulled from the market
For example, although there are 874 standard savings accounts in the market, not a single non-ISA account negates the impact of tax and inflation regardless of the individual’s tax position, while even with the tax advantage; there are only five ISAs that beat inflation.
The impact of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20 per cent, would have the spending power of just £9,022 today.
News today that even the price of gold is falling, anyone with spare cash to invest would be wise to take professional advice on the best returns for their money if they are to enjoy their retirement years in the manner they deserve.