Nearly 1 in 5 failing to save anything for retirement

About one out of five people are still failing to save anything at all towards their retirement, a report has suggested.

The Scottish Widows Retirement Report found the proportion of people not saving at all was 18% this year. This compared to 19% in 2015.

The mean age at which people think they can comfortably afford to begin saving for retirement has risen, according to the research conducted by YouGov, in the past year, to 29.3 years from 28.9 years.

The age at which most would like to retire at has fallen to 62.5 years from 62.7 years last year.

The average income people believe they will need for a comfortable retirement has also increased to £23,990, up from £23,254 in 2015.

Report authors said that this year’s research “revealed a troubling trend among those in the 40-49 year old age group”.

They said: “The number of non-savers in their 40s is also up to 19% this year from 16% in 2015, despite the fact that on average, there are fewer people not saving this year compared to last.”

“Jointly with those aged 30-39, the youngest age group in the Scottish Widows Pensions Index, they have the lowest adequate savings levels (53%).

“Furthermore, while the proportion of adequate savers in their 30s has risen from 52% in the past 12 months, among those in their 40s, this figure has dropped from 57%.”

Overall, the report said savings levels in the UK were showing signs of steadying at the same time as the number of people expecting to receive a defined benefit pension continues to fall.

The proportion of people saving adequately for retirement has been buoyed by the introduction of auto-enrolment and on an upward trajectory since 2013.

But in 2016 the number stayed static year-on-year at 56%.

This levelling off appears likely to continue as nearly two thirds of people (58%) believe they won’t be able to save any more in the next 12 months than they do now.

The proportion of people relying mainly on defined benefit (DB) pensions for their retirement income now stands at 24%, down from 28% last year, and well below the 36% recorded in the first edition of the Retirement Report in 2005.

Robert Cochran, retirement expert at Scottish Widows, said: “With three solid years of improvement behind us, it is disappointing to see that savings levels are starting to plateau. Particularly worrying is the fact that savings levels among those in their 40s drop off at a time in life when retirement may be within 20 years.”