Almost three-quarters of Britons, both living in the UK and expats abroad, may not retire with sufficient funds to maintain their current lifestyle, according to a survey by leading financial advisory and fintech deVere Group.
The survey – carried out among potential new clients – found that 74% respondents underestimate how much they need to save for retirement, which could have grave long-term implications.
“There’s a retirement crisis looming for Britons,” said Nigel Green, CEO and founder of deVere Group.
“Too many people are simply not saving enough, and they don’t realise just how much more they will need in order to retire comfortably in the future,” he added.
According to the survey, the primary reason cited by respondents for not being on track is insufficient savings.
Many Brits are not considering the full range of factors that will affect their retirement, such as inflation and healthcare costs.
When asked, “What percentage of your current income could you live on in retirement?” most respondents grossly underestimated how much they would need, with many unaware of how rising inflation could erode their purchasing power over time.
“It’s not just about what you have in the bank today, it’s about the real value of that money when you retire,” explained Green.
“If you’re earning £50,000 today and you think £1 million will be enough to sustain that lifestyle, you need to consider inflation.
“In 20 years’ time, with inflation running at 3.5%, you’ll actually need £2 million just to have the same spending power that £1 million gives you today.”
Inflation was just one of the key issues identified by deVere’s survey.
With inflation running at an average of 3.5%, retirees will need double the amount of money in the future to maintain their current lifestyle, according to deVere. The longer the retirement period, the greater the financial challenge, particularly when healthcare and social care costs are added to the equation.
“People often believe they’ll spend less in retirement,” said Nigel Green.
“But in many cases, the opposite is true. You might spend less on commuting and work-related expenses, but healthcare costs increase, and many people find that they want to spend their time traveling, spending time with family and engaging in hobbies. These things all cost money, and if you’re not prepared, it’s easy to run out of funds.”
Importance of investing
The deVere Group survey also highlighted a lack of awareness around the importance of investing as part of retirement planning.
Many people focus solely on saving, not realising that investing is critical to growing their wealth over time, especially with inflation eating into their savings.
CEO Green urged people to think strategically about their financial futures.
“It’s not just about saving, investing is essential to building a retirement fund that will last. The compound effect of investing over time can significantly boost your retirement savings, helping you achieve a sustainable income in retirement.
“Simply saving without investing can lead to serious shortfalls, especially when inflation is taken into account.”
The deVere founder is clear in his message: the earlier people start planning for retirement, the better.
“People need to take action now to secure their financial future. It’s vital to regularly review your retirement goals, evaluate how much you’ll need to live comfortably, and adjust your savings and investment strategies accordingly,” he concluded.
“Working with a financial advisor can help you develop a comprehensive plan that considers all the variables—like inflation, investment returns, and healthcare costs—that can impact your retirement.”
