Younger people unsure of better retirement than their parents

Working age adults are unsure whether their life in retirement will be better than their parents’, according to research by the Financial Services Compensation Scheme (FSCS), which highlighted several areas of concern.

Younger people appeared to be the most optimistic, with 44 per cent of 18 to 24 year olds thinking their retirement will be better than their parents, compared to 24 per cent who believed it will be worse.

However, people aged between 35 and 44 were the least optimistic, with less than a third (30 per cent) believing they will have a better retirement and 35 per cent thinking it will be worse.

More than half (51 per cent) of people who planned to retire before state pension age expected a more positive experience in retirement.

All workers under the age of 65 expected some aspects of their retirement to be better, according to the study, but economic pressures were creating concerns that money will not go far enough in retirement.

People tended to expect their quality of life, physical and mental health, and their ability to travel will be better than that of their parents’ generation.

However, 40 per cent of future retirees believed their ability to fund their retirement would be worse than their parents, while 48 per cent thought they would be less likely to retire early.

More than half (56 per cent) of working age adults were concerned their standard of living would drop in retirement and 47 per cent worried about how they would cover their housing costs.

The FSCS noted that, despite the concerns, there appeared to be low levels of awareness around the complexities of planning for retirement, with 25 per cent of working adults feeling they had a lack of understanding of pensions/savings products.

Furthermore, over a fifth (21 per cent) feared not having access to compensation if things go wrong with their provider and just 35 per cent felt comfortable about planning for their retirement.

“It’s encouraging to see the optimism in future UK retirees, but it’s unsurprising that many are also concerned when it comes to their ability to fund their retirement dreams,” commented FSCS chief communications officer, Lila Pleban.

“The UK’s current economic climate, including the rising cost of living and housing costs, is a source of concern for those making any major financial decision. And with retirement a particularly emotive milestone and one that everyone wants to get right, it is understandable these pressures, and concerns money will not go far enough, are front of mind when thinking about their future.

“It’s clear from our research that those thinking about or approaching retirement must have access to the knowledge and tools they need so they can choose their products wisely as they try to bridge the gap between the retirement they expect and their concerns about how they will fund it.

“Whatever products consumers choose to fund their retirement, we encourage them to check that their money is FSCS-protected and safeguarded if things go wrong. We often see claims where customers have lost money in their pensions and witness the harm that occurs, especially if losses come at a time when people are less able to recoup their money, for example, when they have already retired or are close to retirement.

"That’s why at FSCS we are committed to helping to empower and educate consumers, so they feel confident and well-informed about the decisions they make when it comes to their money.”

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