Research from Fidelity International (“Fidelity”) highlights the growing need for solutions which help employees plan and prioritise for multiple financial goals at the same time. Fidelity’s findings, based on the views of more than 3,000 of its workplace pension scheme members, reveal the financial balancing act that many employees face - as many risk waiting before they prioritise retirement saving.
Property vs. pension - how financial priorities shift with age
The research explores how individuals’ financial priorities shift as they progress with different life stages. For younger members, aged 18-34, the focus is firmly on immediate goals - 35% prioritise saving for property and 29% for everyday expenses, while just 15% are focused on retirement planning.
As members move into their mid-career years (35-44), everyday expenses become even more prominent (40%). With many achieving their property goals by this point, the balance between saving for a home (18%) and retirement planning (28%) shifts.
It’s only in later working life (45-54) that retirement planning begins to take precedence (39%), narrowly overtaking everyday expenses (37%), while the number saving towards a property drops to just 9%.
Daniel Smith, Head of Workplace Investing Distribution, Fidelity International comments: “At the start of your working life it can feel as though there is an endless list of financial goals to work towards - from repaying student loans to saving for a first home. These immediate goals naturally take precedence over longer-term planning, such as saving for retirement. However, waiting until your 40s or 50s before prioritising your retirement savings can result in a significant gap between what’s saved, and what’s needed for a comfortable retirement. Individuals need access to tools and guidance that enable them to balance short-term financial needs and goals throughout different life stages in a tax efficient way. With the right support, these goals don’t have to compete - they can coexist.”
Tackling the retirement savings gap
The research explores how individuals feel about their long-term savings and retirement plans. Two-fifths (40%) say they want support in understanding how much they should be contributing to their pension to help fund a comfortable standard of living through retirement - rising to 50% of those aged under 55.
The importance of addressing this is clear, with the research findings indicating that one in five (20%) respondents aged over 55 expect to work for longer than they had anticipated. Among them, the majority (62%) said this is to fill a shortfall between what they currently have saved and what they will need, or because their financial circumstances have changed.
Daniel Smith continues: “As these findings suggest, many individuals want a clearer sense of what ‘good’ looks like when it comes to retirement saving. Knowing how much to contribute - and when - is critical to building confidence and avoiding shortfalls later in life. It’s crucial that employees have access to the right support, tools and guidance that help them feel in control of their finances throughout their working lives and make the best decisions for their personal goals. While many will undoubtedly be juggling several different savings goals at any one time, it’s important to help individuals balance and prioritise the impact, timing and tax efficiency of saving decisions throughout their lives, including saving for retirement.”
Promoting financial wellness
“Financial wellness is about understanding an individual’s total financial situation. We believe this begins when someone first starts saving and extends well beyond their working life - managing changing priorities along the way. Employers are often the gateway through which employees access educational resources, by partnering with financial services providers to implement financial wellness programmes. Raising awareness of these programmes enables employees to benefit from the support available to them - understanding how to maximise their workplace benefits and maximise their pension contributions.
“We offer support at every stage of this journey - from the information and guidance we offer, supporting individuals through life events, to the online tools and resources we’ve developed to help people plan with confidence. Across both our workplace and retail channels, we continue to invest in resources to help people make smarter decisions - improving support from calculators to coaching and on to financial confidence.”
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