New research reveals most UK adults lack confidence in saving for retirement

Summary

• Most UK adults lack confidence in their retirement planning, according to a new survey.

• 29% of adults turn to family and friends for advice instead of a qualified adviser.

• While a financial adviser can help you meet your goals, only 20% of UK adults have used one.

A new Unbiased survey conducted by YouGov spoke to 2,000 UK adults aged between 18 and 99 to gain insights into how confident people are with retirement planning.

It has revealed that confidence with retirement planning drops sharply with age, starting at 44% among young adults and then falling to only 31% among older people.

The survey also reveals 75% of working people don’t know the estimate value of their current pension pot, with 26% not knowing how much they hope to live on annually when they retire.

This suggests many adults lack confidence and the personal information they need for retirement planning.

The majority surveyed are also unable to explain key pension concepts. These include:

• 56% of respondents could not explain the ‘triple lock,’ when the state pension rises annually in line with the highest out of average earnings, inflation or 2.5%.

• 64% of respondents were unable to explain a defined contribution - the most common type of pension. This is when you build up a pot of money, which is invested over many years to provide an income when you retire.

• 70% of respondents could not explain what a defined benefit pension is, which pays out a guaranteed income for life. This income depends on your salary when you retire and the number of years you’ve been a member of the pension scheme.

Unbiased’s findings reveal a colossal issue facing millions who hope for a comfortable retirement but struggle to save and plan for their golden years.

What can be done to boost confidence with retirement planning?

There are many ways to boost confidence with your retirement planning.

For example, understanding the benefits of the state pension, how your pension pot can grow, and how employer contributions and compound interest can potentially boost your pot is vital.

However, there’s a more straightforward solution to retirement planning – getting expert financial advice.

A qualified financial adviser can help you plan and ensure you're saving enough to enjoy your dream retirement and avoid a hefty, unnecessary tax bill when you access your pension.

An adviser can also help you navigate any unexpected life-changing events along with estate planning so that you can protect your loved ones.

While there are clear benefits to using a professional, only one in five (20%) UK adults use a qualified financial adviser for retirement advice.

Instead, 29% of respondents said they relied on the advice of family and friends, so they are missing out on qualified financial advice.

For those over 55, a quarter of respondents (25%) received professional advice from a financial adviser, with only 16% turning to friends and family.

While discussing your finances with friends and family is positive, their circumstances may not reflect your own, so their advice may not suit your situation and future goals.

For example, some family members may require more money for dependents, want to travel, or may have paid off their mortgage already, so they may not need as much income in retirement.

Among those who received financial advice, many revealed they benefitted from:

• A clearer understanding of their financial goals (36%)

• Help creating a more diversified investment portfolio (36%)

• More confidence in their retirement planning (35%)

• Help creating a retirement plan (30%)

• Lower financial stress (26%)

Why are people not getting financial advice?

When Unbiased asked why professional financial advice is not being sought, the biggest barrier is that it is perceived as too expensive by nearly two-fifths (38%) of respondents.

While costs can vary for financial advice, you can usually get a free initial consultation, including via Unbiased, so you can understand the overall costs before committing to an adviser.

Previous research has indicated that financial advice can improve your health and wellbeing.

According to the International Longevity Centre, financial advice can make people, on average, nearly £48,000 better off in pensions and financial assets than those who don't take advice.

A smaller proportion of respondents (15%) said they didn’t trust advisers, while 12% revealed they didn’t know where to find one.

While it can be tricky to find qualified financial advisers, platforms such as Unbiased can help you find the right one based on what you need help with.

All financial advisers, including those on the Unbiased platform, must be regulated by the Financial Conduct Authority (FCA).

"It’s crucial not to bury your head in the sand,” comments Karen Barrett, chief executive and founder of Unbiased.

“Getting an informed plan in place as early as possible is key.

“Speaking with a professional can help cut through the jargon and give you the confidence to make the right decisions for your future.”

Need help with your finances?

While working towards your future financial goals can be daunting, it doesn’t have to be.

If you need guidance with your finances, whether it’s retirement planning, buying a house or estate planning, help is available.

Unbiased can quickly match you with a qualified financial adviser, mortgage broker, or accountant who can help you reach your future goals.