26th February 2014
More than half of UK consumers are worried they will not have enough money to retire comfortably yet only 16% plan to put more into pensions and retirement savings next year.
Insurer Aviva’s latest Consumer Attitudes to Savings report shows that 55% of UK consumers worry that they will not have enough money to provide an adequate standard of living when they retire, with 18% of consumers saying they do not hold any form of savings or long term investment products.
Some 49% believe they will have to work beyond the normal retirement age. Yet for the first time in three years consumers’ confidence in the economy has surpassed confidence in household finances.
Net confidence among UK consumers in the general economic outlook, whilst still negative, has risen by 26 points from -33 to -7 percentage points over the past 12 months. Meanwhile, net optimism over UK household finances grew by 7 points to -11 percentage points over the same.
So, whilst economic confidence is growing, people’s confidence in improvements of their own household finances is increasing much more slowly.
Aviva says these levels of concern are having an impact on consumer spending. Over two thirds of UK consumers (71%) are cutting back on discretionary spending such as eating out in restaurants (51%), holidays (46%), and clothing (46%).
Just under one third of UK consumers (34%) feel that they are ‘just about getting by’ financially; with 14% saying they are finding it difficult to cope with household finances.
Tim Orton, Aviva’s pensions and investment product director says: “Since the financial crisis the pressures on UK household budgets have become stronger and have affected more families, leading them to cut back on savings, and it is understandable that some are unable to save.
“Our research reveals widespread concern about having an insufficient income in retirement and many seem resigned to working longer.
“We can take some comfort from the fact that, while UK confidence in the general economic outlook is still in the negative territory, it has reached its highest level since 2010. But this rising confidence is not mirrored in people’s confidence in their own finances and it is vital people save for retirement and protect themselves from life’s uncertainties.”
Across Europe, the survey shows that consumers remain similarly concerned about their own financial resilience.
Unexpected expenses (57%), such as home repairs, and increases in the price of basic necessities (52%) are the two primary financial concerns for European consumers. As a result, over half of European consumers surveyed are cutting back on discretionary spending.
Financial constraints have an impact on Europeans’ long-term planning. While two-thirds of consumers have some type of savings product, only 38% of those surveyed in six European markets said they were taking steps to ensure they have an adequate level of income in retirement. Meanwhile, almost half of the pre-retired Europeans surveyed (49%) expect to work beyond their normal retirement age to fund their retirement.
Confidence in the general economy and household finances is improving slowly. Although net economic confidence remains low at -24 percentage points, the six percentage point improvement may be a sign of an initial recovery in European consumers’ confidence across the region.
* Aviva’s Consumer Attitudes to Savings (CAS) survey asked people for their views on saving, financial planning and financial priorities. It represents the views of 13,000 consumers in twelve countries. The EU markets included are Ireland, Spain, France, Italy, Poland.