Skipton Building Society Retirement Index

Transcription

1 Skipton Building Society Retirement Index 1

2 Contents 03 Foreword by David Cutter, Skipton Building Society Chief Executive 04 Introduction - the aims and objectives of our survey 05 Methodology - how we conducted our retirement survey 06 Skipton Building Society Retirement Index - what it is and how we calculated it 07 Key findings 08 Retirement Confidence Curve 09 Expectations vs. Reality 10 Confidence 14 Personal Finance 18 Retirement Readiness 22 Conclusions 24 Appendix Foreword by David Cutter, Skipton Building Society Chief Executive Since our foundation by George Kendall in 1853 we ve been dedicated to helping our customers plan for the major stages in their life. Enjoying a comfortable and happy retirement is surely something we all aim for during our working lives. At Skipton Building Society we are driven to help our customers achieve that, providing a guiding hand on the path towards retirement. But if you ve not yet retired then how confident can you be that your retirement will meet your expectations? And how do these expectations compare to the reality experienced by those who have retired? This is why we commissioned a survey to look at expectations vs. reality; to go beyond simple figures and examine both head and heart. We worked with Ipsos MORI to conduct a survey amongst British adults who are aged to determine attitudes to life styles in retirement, financial security, and the levels of confidence in both. The results were incredibly revealing, and enabled us to create what we believe is Great Britain s first ever sentiment-based retirement index The Skipton Building Society Retirement Index. * The index shows an expectation gap between pre-retirees ² low expectations and the far more positive reality of those enjoying their golden years. It also reinforces the importance of planning ahead, and the fact that retirement is a highly emotive issue, not just a question of hard figures. These important results have allowed us to enhance our service for customers old and new, helping them have the best possible chance of retiring happy and secure. We believe the Skipton Building Society Retirement Index is a key milestone; a benchmark that tracks the retirement issues that really matter to British people in the middle of the second decade of the 21st century. However, we see it as just the start. Our long-term aim is to use our index to track changing attitudes over time, providing a unique insight into retirement in Britain today, and for many years to come. We believe the Skipton Building Society Retirement Index is a key milestone; a state-of-the-nation benchmark on the retirement issues that matter to British people. 02 * A full explanation of the Skipton Building Society Retirement Index is available on page 08 1 Throughout the report, British people is used to refer to British adults syrveyed aged years. 2 Throughout the report, pre-retirees and pre-retired people refer to British adults aged who classify their working status as anything other than retired; retirees and retired people refers to British adults aged who classify their working status as retired 03

3 GB Regions Introduction Why? So why did we decide to create the Skipton Building Society Retirement Index? Methodology How we conducted the survey To compile the survey and calculate the Skipton Building Society Retirement Index we teamed up with Ipsos MORI. Ipsos MORI carried out an online survey with a quota sample of 3,000 men and women across England, Wales and Scotland aged between 15th and 20th July Quotas were set for age, gender, region, household income and working status. The data was weighted to reflect the population proportions of those in this audience. This included a mixture of pre-retired and retired people. 4% 11% 9% 9% 7% 9% North East Gender Age North West Yorkshire & The Humber West Midlands 51% 49% East Midlands East of England 9% 14% 14% 5% 9% South West South East Greater London Household Income Up to 19,999 20,000-34,999 Wales 35,000-54,999 Scotland All GB 23% 28% 23% 15% 55,000+ Retired The 2014 Budget marked a sea change in the way people could access their pensions. As a result pensions and retirement became headline news, featuring prominently across traditional and social media. This led to many companies releasing reports that focused heavily on the financial aspects of retirement, often without addressing the emotional, sentimental aspects of what is arguably one of the biggest changes in our lives. We wanted to redress this by looking across wider lifestyle issues impacting on retirement, like why the fear of retirement is an issue for some, and what factors are triggering concerns. Central to this has been examining how the expectations of pre-retirees compare to the experience of those who have retired. Our aim Our aim from the start was clear: to create our own GB-wide, retirement-focused confidence index. The findings of our survey were used to create the Skipton Building Society Retirement Index a detailed whole picture of what British adults aged in 2015 think about retirement, both their perceptions and experiences. A long-term view The 2015 issue of the Skipton Building Society Retirement Index may be the first, but it is by no means the last. Instead, this first reading provides a vital benchmark. Our Retirement Index can be revisited nationally year-upon-year, and on a more frequent basis, to constantly track changing experiences and attitudes. Those surveyed were asked about their attitudes to retirement, financial security, and their levels of confidence in both. They were also asked about relevant health, care and society issues. 13% 19% 19% 19% 17% 12% Working Status 44% Full-time paid employment 13% Part-time employment 36% 27% 17% 7% Up to 19,999 8% 15% Self-employed Retired 8% 8% 3% 1% Home-maker Unemployed Student 20,000-34,999 35,000-54,999 Other 55,000+ If the figures do not equal 100% this is due to rounding. 11% (All GB) and 13% (retired) refused to answer household income. 04 3,000 British adults aged

4 Skipton Building Society Retirement Index How we calculated the index The questions posed to the pre-retired and retired people in our survey were broken down into four sections: Financial Preparation, Health in Retirement, Retirement Optimism and Views of Society. Our index is made up from six different retirement focused statements that best reflect the attitudes and feelings of those surveyed. The index score is calculated by adding together the proportion of respondents who d to each of the selected statements (or disd to the one statement where this reflected a positive response). The total was then divided by six to provide the average proportion of respondents who were positive. This figure was divided by 10 to provide an index score out of 10. We believe the Skipton Building Society Retirement Index is the first ever British index to capture retirement expectations vs. reality. Skipton Building Society Retirement Index score 3.3 Pre-retired 6.1 Retired The results of the first ever Skipton Building Society Retirement Index reveal the considerable gap almost double between pre-retired (3.3) expectation and reality of the retired (6.1). We think this reinforces our belief that reality is far more positive than perception, with careful planning ahead enabling a happy, comfortable retirement. These Index numbers will provide an ongoing barometer of the nation s attitudes and confidence when it comes to retirement. Questions To what extent do you or dis with the following statements? I am confident that I will be able to live the lifestyle I want in retirement/ I am able to live the lifestyle I want in retirement. I am concerned that my health will impact my quality of life in retirement. I am actively preparing for my retirement/ I actively prepared for my retirement. Retired people make a valuable contribution to society. I feel confident that I will be able to stop work and retire when I want to /I was able to stop work and retire when I wanted to. I believe my standard of living in retirement will be good, if not better than my parents generation/ I believe my standard of living is as good as, if not better than that of my parents generation. Pre-retired 34% 15% dis 33% 60% 29% 28% Retired 65% 20% dis 61% 84% 64% 74% Key Findings 34% of pre-retired Brits surveyed are confident they ll be able to live the lifestyle they want in retirement, compared with 65% of retired people surveyed who do. A lack of income/money is cited as the main reason (41%) among those retirees surveyed who don t feel they have the lifestyle they want, followed by poor health (17%). Almost a third (32%) of pre-retirees surveyed are not looking forward to retirement and less than a third (28%) surveyed believe their standard of living will be as good, if not better, than that of their parents generation. Compare this with the three-quarters of retirees (74%) surveyed who say their standard of living in retirement is as good, if not better, than their parents. While 64% of retirees surveyed were able to stop work and retire when they wanted, half that number only 29% of pre-retirees surveyed believe they ll be able to do the same, with just 17% of pre-retirees expecting their retirement years to be the best of their lives. 79% of those who are defined as happy retirees 3 in retirement, took active steps to prepare for their retirement. Almost half of retirees surveyed feel they are comfortable or well-off financially (48%). The least optimistic group are pre-retired middle aged people (35-54 years), with just three in ten (31%) surveyed believing they will achieve the lifestyle they want in retirement. Retirees surveyed that have achieved the lifestyle they want are more likely to have a DB (defined benefit/final salary) pension, cash based savings and investments than those who have not achieved the lifestyle they want Happy retirees are retired respondents (under 75) who that they have the lifestyle they want and describe themselves as well-off or comfortable financially. 07

5 Net ment with statements Retirement Confidence Curve 60% 50% 40% 30% 20% 10% 0% -10% -20% I am confident that I will be able to live/i am able to live the lifestyle I want in retirement (net). I am actively preparing for my retirement/i took active steps to prepare for my retirement (net). Confident I will have the lifestyle I want. Actively preparing for retirement. Expectations vs. Reality Our survey has revealed a genuine expectation gap between what pre-retirees believe their later years to be like, and the reality experienced by those who have retired. We ve broken down the findings into three key areas: Confidence Personal Finance Retirement Readiness In this section we take an in-depth look at the issues associated with each area. -30% -40% ,000 British adults aged Net equals the proportion who minus the proportion who dis. The findings of our survey have revealed a retirement reality checkpoint between the ages of 35 and 54 when the practicalities of preparing for a good retirement truly hit home. For young people aged 18-24, ignorance is bliss with just one in five (21%) taking active steps to prepare for retirement, but nonetheless they are confident they will have the lifestyle they want. In middle age (aged 35-44), as more people begin to actively prepare for retirement, they become increasingly concerned at the size of the task in the face of financial commitments such as children and a mortgage. Those between the ages of 45 and 54 are the least confident about their prospects, with fewer than one in three (31%) confident that they will be able to have the lifestyle they want. However, as these commitments become fewer and preparation increases after the age of 55, optimism about retirement increases. For those aged over 65, many of whom have retired, 64% that they are living or will be living the lifestyle that they want in retirement, compared to just one in six (17%) who dis

6 Conf idence 01. I am confident that I will be able to live the lifestyle I want in retirement Whenever there are reports about the financial state of the nation the one factor that seems central to how we feel about the future is confidence. That most intangible yet crucial of emotions, confidence is perhaps the key indication of where the nation s head and heart lies when it comes to matters financial and lifestyle. And so it proves to be when it comes to planning for retirement. The lack of confidence in being able to live the lifestyle they want among the pre-retirees is one of the reasons for the expectation gap and fear of retirement that the Skipton Building Society Retirement Index has identified. The figures also reveal that happy retirees are much more likely to they are in control of their finances compared to unhappy retirees 4 (96% vs 52%), understand their financial options (86% vs 47%) and to have actively prepared for their retirement (79% vs 38%). Here are four key indicators of how confident the pre-retired people we surveyed feel about their future, compared to how the retired people we surveyed view their lives. The expectation gap is most vividly demonstrated by the fact that only 34% of the pre-retirees we surveyed are confident they ll be able to experience the lifestyle they want in retirement, compared to the 65% of retired people we questioned who do. 34% 65% Compared with of pre-retired Brits surveyed are confident they ll be able to live the lifestyle they want in retirement. of retired people surveyed who are living the lifestyle they want. The least optimistic are middle-aged pre-retirees aged 35-54, with only 31% of those surveyed ing that they will have the lifestyle they want in retirement. Amongst those we surveyed, younger people (18-34 years) and older pre-retired people (55-75) are slightly more likely to than the middle aged (36% and 39%, respectively). Over two-thirds of retired people surveyed are living the lifestyle they want in retirement. Only a third of pre-retirees questioned are confident they will be able to do the same. 28% 74% of pre-retirees believe their standard of living will be as good, if not better, than that of their parents generation versus three-quarters of retirees. surveyed who say their standard of living in retirement is as good, if not better, than their parents. 17% of the pre-retired we surveyed think they ll be comfortable or well-off in retirement, compared with 48% of retirees surveyed who say they are. Tellingly, a quarter of the pre-retired people (25%) surveyed expect to have a defined contribution pension (including SIPPS) to fund their retirement, with 34% relying on cash savings and 28% expecting a final salary pension /defined benefit. A further 15% expect to work part-time during their retirement. Just 17% of pre-retirees surveyed think they ll be comfortable or well off in retirement, compared with 48% of retirees who are. Another revealing statistic is pre-retirees surveyed feel that not only will they have a less comfortable retirement than their parents generation, only 28% that their standard of living in retirement will be as good, if not better, than that of their parents generation, but also the generation that follows will be worse off (only 17% that the next generation s standard of living will be as good, if not better, than that of their generation). Only 29% of pre-retired people surveyed feel confident they will be able to stop work and retire when they want to, compared to 64% of retirees surveyed who have done just that. As you would expect age plays a role in how people react to how confident they feel that they will be able to live or living the lifestyle they want in retirement. The youngest people surveyed aged were the most optimistic pre-retirees, with 38% replying in the affirmative, compared with just 31% in the category. The figure rises substantially to 43% for those in the range, rising to 64% for people aged The men surveyed are the more optimistic with 41% ing with the statement that they are confident they will be able to live or are living the lifestyle they want, compared to 36% of women who. When it comes to the question of whether people are confident they can live the retired lifestyle they want, people we surveyed from Yorkshire are positive, with 41% ing they are confident. In comparison, the people of Wales are slightly less confident, with 37% responding positively to the same question Unhappy retirees are retired respondents (under 75) who dis that they have the lifestyle they want and do not describe themselves as well-off or comfortable financially 11

7 02. The key reasons pre-retirees are confident that they will have the lifestyle they want in retirement. 5 The old adage of fail to prepare, prepare to fail is backed up by the reasons why pre-retired people surveyed say they are confident that they will be able to live the lifestyle they want in retirement. Only attribute good early planning to achieving their desired lifestyle in retirement. I have a simple lifestyle, not extravagant. I have paid into a pension fund for a long time and am confident this will be an adequate income. Having enough savings is the top reason (23%) why people questioned feel confident about achieving their desired lifestyle in retirement, followed by having good pension plans (16%) and sufficient income (11%). Only 9% 5% cite financial planning and careful spending. My desired lifestyle is not particularly expensive. I am good with money and plan to save a lot of money before retirement. 03. The key reasons pre-retirees are not confident they will have the lifestyle they want in retirement. 6 For more than a fifth (21%) of those pre-retirees surveyed who are not confident they will have the lifestyle they want in retirement insufficient funds/lack of money/income is deemed the reason why they don t feel confident. Not having enough savings (10%) and uncertainty about the future (10%) were also key reasons. A lack of money is the main reason why pre-retirees surveyed are pessimistic about their future. A tenth (10%) of pre-retirees surveyed who are not confident they will have the lifestyle they want in retirement believe their pension plan, the state pension or perceived instability regarding their pensions is the reason. For 8% the reason is not having a pension plan or having a small pension with a low value. Although I have a pension I don t feel it ll provide enough money to support myself and my wife as we would like. We also don t own property, which is a significant issue for us. 04. Pre-retired people are more pessimistic about their future We posed several questions to gauge confidence levels about the future, and in most cases the pre-retired people surveyed were more pessimistic about retirement than retirees. The most startling difference is that only 28% of pre-retired people surveyed think their retirement will be as good, if not better, than their parents generation, compared to the 74% of retired people questioned who believe it is. Only a quarter of pre-retired people surveyed think their retirement will be as good, if not better, than their parents generation. When asked if they felt confident they could stop working and retire when they want to, 29% 64% of pre-retirees surveyed think they could, opposed to... of retired people surveyed who have. When it comes to finishing work the sentiments are more closely aligned, with 30% of pre-retired people surveyed saying they can t wait to retire, compared to the 43% surveyed who couldn t wait to retire; yet another indication that the fear of retirement is a real issue for many. 34% of pre-retirees surveyed said they will miss work, compared to a lowly 12% of retirees surveyed who actually do. Does confidence equal happiness? The disparity between pessimistic expectations and positive reality is present throughout the issue of confidence. It is perhaps best encapsulated in the response to the question of whether people believe their retired years will be/are the best of their lives. While only 17% of pre-retirees surveyed they will be, a more heartening 39% of retirees surveyed said they are & 6 Answers represent the themes derived from the open question Why do you feel that you are confident/not confident about achieving your desired lifestyle in retirement? 13

8 Personal Finance Finance Retiresavvy Retiresavvy is a knowledge-sharing online community for people approaching and already in retirement, created and powered by Skipton Building Society. Bringing insights, information and inspiration, it s a place where people can discover what they need to demystify retirement, as well as making connections with other like-minded individuals on a similar journey. 1. Review your situation and goals Examine your finances and consider when you can afford to retire, looking at what you ll need to live on in retirement and the lifestyle you would like to enjoy. Although you won t be spending as much on commuting, other outgoings like holidays, travel and debts mean you may need more than you think. Work out a realistic budget and think whether it s feasible to retire when you originally planned. Talk to your partner and work out a plan that you are both happy with. You might need to reassess the kind of lifestyle you can expect in retirement. Featuring free guides, polls and a forum where you can interact with other users, it s a great place to find the support and information you need about retirement, whichever stage of the journey you re at. Five tips to boost your retirement confidence from Retiresavvy.co.uk 2. Track down lost pensions If you have paid into your employers pension schemes over your working life, you will have built up pension entitlement on the way. If you have changed jobs, get in touch with the pension trustees of your old employers to find out what you are entitled to. If you can t remember or can t find the details of past employers they may have moved or merged over the years then the Government s free Pensions Tracing Service can help you track them down, but it s up to you to get in touch with the schemes once they re found and claim your pension. 3. Find out your State Pension entitlement Many people rely on the income the State Pension provides in retirement. To find out your State Pension entitlement, go online and fill in a BR19 form. The Government is also introducing personalised entitlement statements for people who will reach the State Pension Age between 2016 and Bear in mind that the State Pension Age is due to rise. It will be 66 for both men and women by October 2020, and will to rise to 67 by October Make sure you factor this into your retirement planning. 4. Get ready with financial guidance and advice If you re looking to make the most of the new freedoms that came into effect in spring 2015 or want to know how best to invest your nest egg, you may want guidance or to take financial advice. Guidance, as offered by the Government s Pensions Wise service or retiresavvy, can only offer information and generic detail. It can be a useful starting point for understanding options, but if you want or need more in-depth personalised advice tailored to your own circumstances, you will need to take professional financial advice from a qualified, professional financial adviser. 5. Keep working If you can t afford or don t want to retire, then you re not alone. If you re currently employed and approaching pension age, your employer can t force you to retire except under certain circumstances so your retirement date is largely up to you. Working in retirement can range from cutting your hours and working part-time either with your current employer or in a new job, taking on a consultancy role, or starting your own business. If there s one factor that determines how comfortable, secure and happy we are in retirement then it s how much money we have. Whether it is a personal pension, savings, property or stocks and shares, having sufficient money can have a huge effect on our approach to retirement. Not having enough money is cited as the main reason (41%) why retirees in our survey feel they haven t achieved their desired lifestyle. How are your finances? We asked both pre-retired and retired adults how they expect their financial situation to be in retirement, ranging from poor to well-off. The results confirmed the feeling among pre-retirees that they are more likely to struggle than those who are already retired, with only 17% expecting to be comfortable or well off in retirement. This compares to almost half (48%) of retirees who felt they were either comfortable or well-off. Tellingly just 15% of pre-retired people surveyed think they will be financially comfortable, compared with 41% of retired people surveyed who say they are. Almost identical numbers surveyed (31% and 32% for pre-retired and retired people, respectively) said they expected to be or were secure. 44% of pre-retired people questioned feel they will struggle financially, or will just be able to get by with the basics, compared with 20% of retired people. Of those surveyed only 2% thought they d be well-off in retirement, with just 7% of those retired stating they are. Just 15% of pre-retired people surveyed think they ll be financially comfortable, compared with 41% of retirees surveyed who say they are

9 Sources of retirement income How financially prepared are you for retirement? Gender differences Summary Our survey reveals a slightly different approach between preretired and their retired counterparts when it comes to sources of retirement income. When it comes to pensions 61% of retired people surveyed have either a defined benefit or defined contribution (including SIPPs) pension, compared to 48% of pre-retirees questioned. And while retired people surveyed are twice as likely to have a defined benefit / final salary pension (49% vs. 28% among pre-retirees), a larger proportion of pre-retirees have a defined contribution pension (16% of retired vs. 25% of pre-retired). Nearly two-thirds of retired people surveyed have a defined benefit or defined contribution pension. Around a third of pre-retired and retired people surveyed either expect to have/do have cashbased savings (34% and 37%, respectively) as a source of income for their retirement. Only 6% of the pre-retired generation questioned foresees having an annuity, which compares to double the proportion of retired people surveyed (19%) who have one. 49% 26% 48% 34% 63% 45% Our research into this area suggests that the pre-retirees we surveyed are perhaps not taking enough steps to prepare for retirement, even though they may have the potential to put money aside. Just under half of pre-retired people aged surveyed strongly they are in control of their financial situation, compared to a much higher 81% of the retired people we surveyed. 61% of retired people surveyed actively prepared for retirement, compared to only 26% of the young peoaple we surveyed who say they are doing so. 81% 61% Retired % - I am in control of my financial situation % - I am actively preparing for my retirement/i actively prepared for my retirement The issue of taking active steps to prepare for retirement or not is perhaps more concerning. 26% of those aged surveyed say they re actively preparing for retirement. 34% of people in the category are preparing, making them only marginally more likely to be preparing, than the 18-34s. More reassuringly, the level of readiness among retired people is more than double that of the youngest, with 61% of retired people we surveyed claiming to have taken active steps in preparation for their retirement. When it comes to preparing for retirement it seems men are the more positive sex. Of those surveyed 42% said they were, or had, taken active steps to prepare for retirement. Regional differences Compared to only 33% of the women surveyed who feel they have taken or are taking active steps. North East & East Midlands Residents of the North East and the East Midlands are the most prepared with 42% & 40% respectively of those surveyed ing that they are or have been taking active steps in preparation for retirement. East & South West of England Residents in the East and South West of England we surveyed are at the opposite end of the scale, with just 34%in each region saying they have/are taking active steps to prepare. When it comes to the issue of financial control the sexes are more closely aligned, with more than half of men and women surveyed 57% & 54% ing they are in control of their financial situation. Yorkshire The stereotype about Yorkshire-folk being careful with their money does seem to hold some validity, with nearly two-thirds 63% of people surveyed in the White Rose County questioned ing they are in control of their finances. In contrast, only 51% of residents surveyed in the East Midlands share the same sentiment. Very few younger respondents (aged 18-34) surveyed are actually taking steps to prepare for their retirement. Just a quarter of consumers (24%) aged we surveyed feel they understand financial products relating to retirement. Although a quarter of pre-retired people surveyed say they are willing to pay for financial advice about their retirement, just 10% have done so

10 Retirement Readiness So far we ve looked at the differences between pre-retiree expectations and retired reality. However, our survey has also highlighted the different experiences of retired people, and how different factors have led to divergent retired lives. 79% of happy retirees have taken active steps to prepare for their retirement. Key differences in retirement We split the retirees surveyed into those who have the lifestyle they want and are comfortable or well-off (happy retirees), and those who don t (the unhappy retirees). The results show a wide gap between the happy retirees and unhappy retirees on numerous issues, and reinforces the importance of preparing well for retirement. More than double the number of happy retirees (85%) were able to stop work and retire when they wanted to, compared to just (31%) of the unhappy retirees. When it comes to the issue of care in older age the gap is equally stark. While almost half of the happy retirees we surveyed feel financially prepared for any care services in the future (47%), just 4% of the unhappy retirees do. More than half (54%) of the unhappy retirees surveyed worry about affording care in older age, compared to just a fifth of happy retirees (19%). 90% of the happy retirees surveyed say their standard of living is as good, if not better, than that of their parents generation. In contrast, just under half of unhappy retirees surveyed (47%) believe the same. 90% of happy retirees we surveyed with the lifestyle they want say their standard of living is as good, if not better, than that of their parents generation. An incredible Compared to only 96% 52% of the happy retirees surveyed say they are in control of their finances. of the unhappy retirees. This also tallies with 86% of happy retirees who say they understand the financial options and products available in retirement. Compared to only 47% of the unhappy retirees. Similarly Compared to just 79% 38% of happy retirees we surveyed took active steps to prepare for their retirement. of the unhappy retirees

11 The top reasons retired people surveyed don t have the lifestyle they want Why do you feel you are not achieving your desired lifestyle in retirement? (open ended) Retired Insufficient/lack of income/ money/funds 41% Health/poor health 17% Pensions/poor pension plan/state pension isn t enough/uncertainty/ instability regarding pension plans 4% I have a limited income, and things like fuel costs are frightening. My health is poor so I can t work to supplement my income and so am in the heat or eat situation. It comes as no surprise that insufficient funds/ lack of money/income is the top reason among retired people surveyed who feel as if they do not have the lifestyle they want 41% of retirees have attributed this reason. Poor health was the second biggest factor, with 17% among this group citing poor health as a barrier to having the lifestyle they want. Only 4% blamed a poor pension, or what they see as uncertainty or instability regarding pension plans, with the same proportion saying the high cost of living was having an affect on their retirement. Because as you get older you are restricted in what you can do, and I m only on the state pension so money is tight. Finances/financial reasons 3% 20 Base: All retired consumers that do not feel they have the lifestyle they want in retirement, July 2015 (150). 21

12 Conclusions With the Skipton Building Society Retirement Index our aim from day one was to see how expectations and perceptions of the pre-retired tallied with those now in retirement; in essence, to see if you really can retire happy and secure. The clear picture among pre-retirees seems to be a fear of retirement and a lack of confidence in how happy their retirement will be. Almost a third (32%) of those surveyed say they aren t looking forward to retirement, with less than a third (28%) believing their standard of living will be good, if not better, than that of their parents generation. Why the gap between expectation and reality? Unsurprisingly, a lack of income is cited by almost a quarter (21%) of the pre-retirees we surveyed who do not feel confident about achieving their desired lifestyle in their retirement years as a reason. There is a lack of confidence amongst pre-retirees that they ll achieve the lifestyle they want. Those aged are the least optimistic surveyed, with only three in 10 expecting to have the lifestyle they want. Another key sentiment expressed by the preretired in the survey is uncertainty about the future. Of course, this is inextricably linked to a lack of security about employment and financial pressures, particularly for young people aged faced with rising living and housing costs, plus the possibility that they will be living longer and retiring later. The issue of pensions is also a contributory factor to the expectation gap. Unlike the generations before them, very few pre-retirees surveyed have a final salary pension. Only a fifth of young people (19%) aged in our survey have a defined benefit/final salary pension, compared with double that proportion (44%) among those aged years old. It s no surprise then that pre-retirees especially in the younger age categories have a tendency to avoid confronting the issue of retirement and act accordingly. Evidence of this comes from the fact that more than half (51%) of young pre-retirees aged in our survey aren t actively preparing for retirement, with only a fifth (21%) saying they are. Our survey also reveals that even amongst those pre-retired people who feel in control of their finances, retirement saving is still relatively low. This leads the vast majority of pre-retirees (41%) surveyed to believe they will be secure rather than comfortable (25%) in retirement. Prepare to retire happy What is abundantly clear is the link between feelings about retirement (amongst both pre-retired and retired) and an overall lack of preparation. Those pre-retirees who are taking steps to plan for retirement are more confident about the future, while retirees who have taken steps to plan for retirement are now reaping the rewards. The findings of our index show that it is possible to retire happy and feel confident about your future, but preparation is key to this, says David Cutter, Skipton Building Society Chief Executive. We can help people every step of the way to a long and happy retirement, but if they re heading towards retirement and haven t made any plans then it s time to lift their head out of the sand. Even if they ve been added to an auto-enrolment pension scheme and feel like they don t need to do anything else, we d encourage everyone to seek guidance about the options open to them. We offer a range of tools to help people plan for the retirement they want, ranging from in-branch Retirement Reviews ( co.uk/retirement-planning) through to the guidance and information available from our online retirement community, retiresavvy. Reasons to be cheerful it s not all doom and gloom! On its own this would make for pretty gloomy reading. However, there is a silver lining and it comes from those who have actually experienced retirement. Because the reality from those retirees we surveyed is that they re enjoying secure and happy lifestyles. Around two-thirds (65%) say they re able to live the lifestyle they want, compared to just over a third of pre-retired (34%) who don t feel confident they ll attain the lifestyle they want. Low expectations don t tally with reality The pre-retired are significantly more pessimistic about the outlook for their retirement than is the current experience for today s retirees. Just 17% of pre-retirees surveyed expect their retirement to be the best years of their life compared to 39% of retirees. Control equals contentment The happiest retirees in our survey are much more likely to be in control of their finances (96% vs. 52%), understand their financial options (86% vs. 47%) and have actively prepared for their retirement (79% vs. 38%). Retirees in our survey that have achieved the lifestyle they want are more likely to have a (defined benefit/final salary) pension, cash based savings and investments. Nearly two-thirds of retired people surveyed have a defined benefit or defined contribution pension. In spite of not having final salary pensions, many are still happy as they took the right steps to plan ahead and ensure they had other sources of income. Freedom is valued most, but comes from financial security While money isn t everything for the retirees in our survey, it certainly helps. A higher proportion of those retirees surveyed who are achieving the lifestyle they want, told us that this is driven by a sense of personal freedom than having sufficient income (32% and 20%, respectively). However, this retired lifestyle is underpinned by having a decent degree of financial security. Those who are not achieving the lifestyle they want in retirement cite a lack of sufficient income/money (41%) and poor health (17%) as the top reasons for this. Extra income is not the key reason for working in retirement, either. Of the 28% retirees surveyed that are working, the majority are undertaking voluntary work. This positive action is perhaps one of the reasons why nearly two-thirds of all the people we surveyed (63%) believe retired people make a valuable contribution to society

13 Appendix In the report, various sub-groups are referenced. The base sizes for these can be found in the table below: 24 Category Pre-retirees / Pre-retired Retirees / Retired All respondents aged All respondents aged All respondents aged All respondents aged All respondents aged All respondents aged Pre-retirees who expect to have the lifestyle they want Pre-retirees who do not expect to have the lifestyle they want Retirees who feel they have the lifestyle they want Retirees who don t feel they have the lifestyle they want Happy retirees Yorkshire Wales East Midlands All quotes shown in this report are taken from the respondent comments. Unweighted base sizes For today. For tomorrow. For life ahead. Rebecca Willey Corporate Communications Manager Skipton Building Society skipton.co.uk/retirement-index