A recent report has found that a significant number of people aged 35 to 44 are still struggling to save anything for the longer term, and are only just affording to pay for their present circumstances. Whilst 37% said that they struggle with their finances from time to time, 34% of people between these ages find it difficult to keep up with bills and repayments, describing their finances as squeezed – a figure which equates to around 2.4 million people across the UK.
Within the squeezed group, more than two thirds said they could not afford to put away more than they already were towards their pension, whilst staggeringly, more than four in five believed their retirement finances would feel squeezed or unmanageable. The majority of people in this group expected to retire at an average age of 68.
However, the study also discovered a number of ways that people in the 35-44 age bracket could be able to save more for their future. Factoring in pay rises, clearing debt over time and reducing childcare costs as their children get older meant that the financial situation for some was likely to become easier, allowing them to put more away into savings or a pension fund. Many in the squeezed group hoped that their mortgage would be paid off at least five years before they planned to retire, which would also give them additional money to put away later in life.
If the issues raised by the report sound familiar, there are a number of things you can do to help ease your financial situation. Many people think of their future finances as separate to their day-to-day money management, but including saving for the future as a key element of your current finances can really help, especially if your circumstances change through a new job or salary.
A large number of people surveyed had no idea what percentage of their pay was going towards their pension, or even how much they currently had saved for their retirement. Keeping up to date with both of these will help you to know exactly what your situation is likely to be once you do retire.
Setting clear and realistic goals for your life once you have finished working is also a good idea. Work out when you want to retire and the lifestyle you want to enjoy once you do, and this will enable you to work out what you need to save in order to achieve your aims. Make sure you also take advantage of matched contributions to your pension from your employer to boost your savings.
If you have any questions around managing your current finances and saving for the future, please feel free to get in touch with us directly.