Working age people today believe their retirement will be better than that of their parents’, despite several causes for concern, according to research by the Financial Services Compensation Scheme (FSCS).
Younger people are most optimistic with 44 per cent of 18 to 24-year-olds thinking their retirement will be better, compared with only 24 per cent who believe it will be worse.
However, 35 to 44-year-olds are the least optimistic with only 30 per cent believing retirement will be better than their parents’, compared with 35 per cent who believe it will be worse.
Lila Pleban, chief communications officer at FSCS, said: “It’s encouraging to see the optimism in future UK retirees, but it’s unsurprising that many are also concerned when it comes to their ability to fund their retirement dreams.
“The UK’s current economic climate, including the rising cost of living and housing costs, is a source of concern for those making any major financial decision.
“And with retirement a particularly emotive milestone and one that everyone wants to get right, it is understandable these pressures, and concerns money will not go far enough, are front of mind when thinking about their future.”
The research found that differences are even more marked among those who plan to retire before state pension age, with over half (51 per cent) believing their retirement will be better.
Quality of lifestyle, health (both physical and mental) and the ability to travel are all areas where people believe things will be better than that of their parents’ generation.
However, respondents demonstrated concern around how they will fund their retirement lifestyle, highlighting a mismatch between expectations for retirement and the reality of how people can pay for it.
Four in 10 future retirees think their ability to fund their retirement will be worse compared to their parents’ generation, while almost half (48 per cent) think the possibility of retiring earlier will also be worse.
There is even less optimism among those who expect to still be renting in retirement, with over half (52 per cent) thinking their ability to fund their retirement will be worse.
Economic headwinds, such as the rising cost of living and housing costs are among key reasons making people concerned that their money will not go far enough in retirement.
Pleban said: “It’s clear from our research that those thinking about or approaching retirement must have access to the knowledge and tools they need so they can choose their products wisely as they try to bridge the gap between the retirement they expect and their concerns about how they will fund it.
“Whatever products consumers choose to fund their retirement, we encourage them to check that their money is FSCS-protected and safeguarded if things go wrong.”
Elsewhere, the FSCS also found that over half of UK adults (56 per cent) worry that their standard of living will drop during retirement, and almost half (47 per cent) are concerned about how they will cover their housing costs past retirement age.
