Retirement Planning: Your New Year’s Resolution for 2017?

It turns out I’m not the only one with pensions on the brain – or am I? A new study has found that almost half the UK population has an “ostrich mentality” when it comes to saving for the future.

The Skipton Building Society Retirement Tracker, which monitors the retirement savings behaviours of more than 6,000 people up and down the country, has revealed that 48% of us have our heads in the sand when it comes to the dreaded ‘P’ word (pensions), with retirement savings that are either meagre or non-existent.

Skipton Building Society asked me to team up with them to help raise awareness of the dire state of the nation’s retirement savings, and this is a campaign of which I am proud to be a part. Heck, I’ll shout from the rooftops about it! As regular readers will know, retirement is a subject close to my heart: I am currently taking (somewhat overdue) steps to boost my own pension pot.

I must admit, that 48% statistic made me gulp. With no private pension plan and no savings, that is a lot of Ostriches who, if their savings behaviours do not change, will be throwing themselves upon the mercy of the State Pension when they reach retirement. As I have written previously, this is a dangerous game: not only is the State Pension modest but, as hundreds of thousands of women born in the 1950s have discovered to their horror, governments can move the goalposts and change the eligibility criteria according to their whims.

What saver are you?

The Ostriches are one of five groups of retirement savers identified by the Skipton Building Society Retirement Tracker. The crème de la crème are the Wise Owls.  Members of this group tend to have a “more sophisticated portfolio with a broad range of investments and savings.” Nearly half (47%) are saving to fund retirement through a Cash ISA, more than a third (37%) through a personal pension and almost a third (32%) through investments in stocks and shares.

Are you a Wise Owl? The five groups of retirement savers break down as follows:

Ostrich Mentality (48% of the sample)

·         Not saving for retirement or their savings are falling short

·         The majority have nothing saved to supplement the State Pension

Savings Snails (18% of the sample)

·         Saving the minimum they can afford

·         More than a third (35%) believe their retirement savings will be less than they need by the time they retire

·         At the same time, they have no set target for retirement savings

·         The majority have nothing saved to supplement the State Pension

Money Moles (21% of the sample)

·         No set target for retirement savings

·         They have at least one of the following: company pension, cash ISA, habit of making mortgage overpayments

Squirrel Savers (6% of the sample)

·         Have a set target for retirement savings

·         On track to meet or exceed that target

·         May have taken financial advice

·         Majority (72%) of this group are relying heavily upon company pension schemes to fund retirement

·         Their portfolios may not be as “sophisticated” as those of Wise Owls

Wise Owls (6% of the sample)

·         Have a set target for retirement savings

·         On track to meet or exceed that target

·         Have sought professional finance advice

·         Possess a sophisticated portfolio that includes one of the following: personal pension, investments, stocks and shares

Could this be your New Year’s Resolution?

What jumps out at you about the lists above? What strikes me is that only a third of savers (Money Moles, Squirrel Savers and Wise Owls) are anywhere near having their acts together when it comes to funding retirement. In fact, the Retirement Tracker research shows that more than half (51%) of those who have yet to retire, have nothing saved at all.

With Christmas and the New Year coming up, I’d like to suggest something: for a New Year’s Resolution in 2017, how about ‘branding up’ your retirement savings plan?

We talk about branding down at the supermarket, to save money: opting for a supermarket own-brand in place of a premium brand product, or a value brand item in place of the supermarket own-brand equivalent. What about ‘branding up’ to save money for retirement?

Here is the challenge: determine which type of saver you are, as above. If you emerge as anything other than a Wise Owl, make the resolution to shift yourself to the next level up by the end of the year.

At the beginning of 2016 I was a Savings Snail: saving a minimal amount via a workplace pension scheme, with the uncomfortable feeling that it wasn’t enough. Fast forward to the end of 2016 and I am now a Money Mole, with larger contributions and better savings plans in place, but no fixed targets.  Instead, I’m throwing what I can at it. My resolution for 2017 is to become an organised Squirrel Saver, on track to meet or exceed a fixed savings target.

I’m going to shift to the next level. What about you? Can you do it too? Why be a Snail or an Ostrich, when you can be a canny Squirrel or a clever old Owl?

This post was produced in association with Skipton Building Society. A payment for this post, made on Skipton Building Society’s behalf, is helping to fund the running costs of the Miss Thrifty Blog.   

Image credits: Seattle Municipal Archives. All used under a Creative Commons licence.