Talking about the pensions gap and pushing people to save more seem to have had little impact after a study by global financial services firm ING found that most people cannot afford to retire comfortably.
The report looked at nearly 15,000 retirees and people looking to retire across Europe, the US and Australia.
While 61% of people living in Europe worry about having enough money to retire, 42% of those surveyed only had three-months-worth of their salary put aside.
Similarly, 66% of Europeans don’t have any savings at all; as more than half can barely make ends meet, let alone save for retirement.
Demographics
According to ING, women (66%) are more likely to worry about saving for retirement than men (56%).
Younger people are the most worried about their pension savings; with 64% of 25-34-year-olds expressing concern compared with 57% of 18-24-year-olds.
The most relaxed group are those aged 65+, with 45% concerned about their retirement.
The worry sparks from the fact that many people believe they won’t enjoy the same living standards once they retire.
As a result, many think that, even after retirement, they will need some sort of earnings to maintain their living standards.
State intervention and personal contribution
On average, people in Europe believe that the state should have some sort of financial responsibility for retirees – specifically, they said that 43% of funds should come from the government.
However, that changes according to the country, as people in Spain, Czech Republic and Italy think there should be a 50-50 responsibility between the state and the individual; while Brits put 41% of the burden to the individual, something that both the US and Australia echoed.
When it comes to individual contributions, many believe in having some sort of extra personal funding.
Yet, even with this measure in place, 39% of Europeans believe they will receive less money than what they put into their pension savings. This is followed by 22% who, optimistically, believe to get more or less the same amount of money, 13% who expects to get more than what they contributed and the rest did not know.
Technology, friend or foe?
The ING survey suggested that technology – such as apps – could help people keep track what they spend and, eventually, save more.
However, among those surveyed, the vast majority believes that money management apps only allow them to spend or transfer money more often.
On the other hand, just over one in five people use apps for making investments. Of those who do, 38% are confident about using them and are more positive about the returns that those investments could provide in the future.
While only 21% actively invest, 46% believe that investing their savings can be a good way to build wealth.
Shifting attitudes and changing behaviours
Jessica Exton, behavioural scientist at ING, said: “These findings shine a light on the true extent of the problems many face in reaching long-term savings goals.
“Most people across Europe report that they track their day-to-day spending in some way, but many still agree they face financial challenges, such as expecting to need to earn in retirement. Long-term planning is difficult when many are facing short-term savings challenges, a trend seen across all countries surveyed.
“Increased focus on the tools we use to monitor spending and how they influence our behaviour may help to address savings hurdles and support planning for retirement.
“Given the uptake of spending and transferring apps, compared to those for making or viewing longer-term investments, building positive financial habits through the use of technology may lie in day-to-day support, rather than facilitating longer-term planning. We need technology to back behavioural change if we are to truly shift attitudes towards retirement savings.”
