48% of consumers have been classed as having an “ostrich mentality” as they significantly underprepare for their retirements, according to new data from Skipton Building Society.
The Skipton Building Society Retirement Tracker is a new piece of research which monitors the retirement savings behaviours of over 6,000 UK consumers. Through the tracker methodology these consumers are grouped into five distinct “saving” categories according to household income, how much they are using to fund their retirement and retirement preparedness: Wise Owls, Squirrel Savers, Money Moles, Savings Snails or the Ostrich mentality.
The data shows that UK consumers are most likely to fall into the ‘Ostrich mentality’ category when it comes to saving for their retirement, with this accounting for 48% of the total sample. This group is not saving for their retirement or their savings are falling short, and don’t have anything in addition to the State Pension.
When asked why they weren’t saving appropriately for the future, 66% of the Ostrich category admitted they choose not to save because they can’t afford to. However, of those with savings that are currently falling short, 38% believe they’ll be nowhere near their savings target by the time they retire.
51% of non-retirees have not yet saved anything to fund their retirement and half (49%) have no idea how much they need. When it comes to saving, 38% of people surveyed said they can’t afford to save and 13% admit they choose not to.
In comparison, just 6% of the people surveyed have been categorised as “Wise Owls” in the Tracker. This group tends to have a more sophisticated portfolio with a broad range of investments and savings. 47% of the group are saving to fund their retirement through a Cash ISA, 37% through a personal pension, 32% through stocks and shares investments. This group are the most likely to use cash savings to fund their retirement (55% of Wise Owls, compared to 41% of Squirrel Savers and 27% of Savings Snails).
Across the rest of the UK, Skipton’s data shows that it is a mixed picture when it comes to retirement saver types. Only 6% of the sample are classed as Squirrel Savers, meaning that they are on track to meet or exceed their savings but have a less sophisticated portfolio in comparison to the Wise Owl group. The data shows that the majority (72%) of this group are relying more on their company pension to fund their retirement than other investment and savings options.
However, 21% of non-retired people are classified as Money Moles, which shows that they are saving without a set target but have at least one of the following to support them – a company pension, Cash ISA or are over paying their mortgage. Two in five (42%) Money Moles have sought financial advice.
18% can be categorised as Savings Snails. This group is the most likely to talk to their friends and family for advice (18% compared to 7% of Ostriches). They tend to save more than those with an Ostrich mentality but 35% think they’ll be quite far off saving their target amount. In reality, 20% of this group are not saving any part of their annual household income to fund their retirement.
Jacqui Bateson, senior propositions manager at Skipton Building Society said: “When it comes to personal finances, it’s easy to focus on the here and now, not the future. However, when it comes to planning for retirement you cannot bury your head in the sand and avoid the fact that you will need to save something on top of the state pension. Our new Retirement Tracker reveals that the UK is very much a nation of ‘ostriches’ shying away from the reality of saving for their retirement.
“At Skipton, we’ve been helping people to lift their heads up and plan for their life ahead for 163 years and we want to help build the UK into a nation of Wise Owls and Squirrel Savers as much as we can.”