Mortgage costs mean over 45s face retirement saving barriers
For most, a comfortable retirement often seems like a given. However, figures from Aegon research indicates a rising number of people are finding this increasingly difficult to achieve.
The report highlights the mid-life financial crisis becoming ever more prominent with 93% of those aged 45 to 54 saying they face barriers to saving, or saving more, towards retirement.
The cost of living and insufficient income are among the most frequently cited general reasons at 63% and 39% respectively. Among the more specific reasons was the presence of continuing loan or mortgage repayments leaving 36% of individuals with little left over to save.
Figures also showed that difficulties in saving for retirement were faced even for those between 55-60, with only 12% saying they faced no barriers at all. Over a quarter stated that loan or mortgage costs were a significant obstacle where retirement saving was concerned.
As noted in the report, this indicates a generational shift. As familial and thus mortgage commitments extend later into working life, it is not only young people who are struggling to save. Steven Cameron, Pension Director at Aegon queries the trend of deferring pension saving and instead encourages saving from a earlier age, even if only a moderate sum:
“Escalating property prices mean people are taking on larger mortgages which won’t be repaid until later ages. We’ve seen some mortgage providers increase the age at which a mortgage can be repaid to 80 or later. People are also starting families later, and increasing tuition fees coupled with a challenging employment environment for younger people mean parents often face supporting their children for longer than previous generations.
“Deferring pension saving in the hope of a financial boost in your 40s is an increasingly risky strategy. Starting saving even modest amounts from an early age and regularly increasing this a little at a time can make a huge difference to achieving the retirement people hope for. For example, someone who starts saving £80 a month from their take-home pay at 25 could end up with a retirement pot worth £232,000 at age 65 versus a pot of around £52,000 for someone who starts at 45.”