Long term savings and the need for guidance

Anish Rav, 24 January 2018


What age do you think you will live to? Yes, this is a pretty morbid question, and not one that I would normally ask people, but when it comes to saving for the long term and retirement planning, it’s actually pretty important.

For the more squeamish amongst us, we can rephrase the question in a slightly different way: will you have enough money in your later years to be able to enjoy the kind of lifestyle you want? The longer you live, the further that pot of money will have to stretch.

Our research found that people underestimate their life expectancy by an incredible 15 years.[1] 61.1% of employees felt they would be retired for 20 years or less, but the reality is that many will have a retirement that stretches to 35 years! That is potentially a lot of extra time that needs to be funded for.

This means that either you need to retire later, re-evaluate the kind of lifestyle you want or start putting more money aside whilst working. For anybody hoping to take advantage of the greater flexibility that the Pension Freedoms bring it will be crucial to get a clear view on what their financial position will be like throughout retirement. For higher earners, issues such as the Lifetime Allowance and Annual Allowance will have an impact on their planning.

It is only when we start to piece all these things together, will individuals realise that they can’t simply retire from work without giving a thought to what happens next and that planning is crucial.

How prepared are your people for retirement?

How prepared people are for long term savings is relevant to employers, because if staff can’t afford to retire, they may just work longer. This in itself could impact how employers plan for an ageing workforce and its impact (whether positive or negative). It is equally interesting to observe that just over half (50.6%) of employees said they would switch to part-time work if they discovered a retirement income shortfall just before they retired.[2]

Information in itself is widely available in the real world, but there is arguably too much information out there, and knowing what is relevant can be difficult to navigate – hence the need for guidance, education and, where appropriate, advice.

Are you helping to guide your employees on their saving journeys?

The savings journey is really a continual process throughout somebody’s working life and the later somebody shines a light on their retirement planning, the harder it is to get them on the right course.

This means that education, guidance and/or advice could be hugely beneficial in helping people to better understand what is achievable based on what they’re currently doing and what they need to do to enjoy the kind of post-working life they are hoping for.

[1] Capita Employee Benefits, Employee Insight Series: Pensions and Retirement (June  2017) here

[2] Capita Employee Benefits, Employee Insight Series: Pensions and Retirement (June 2017) here


About the author

Anish Rav Head of DC Proposition & Strategy

Anish Rav

Insight Research

Our research reports are aimed at Pension Trustees and HR Directors, covering topics such as pensions, health, flexible benefits, engagement and wellness. They are free to download!

Find out more

Connecting with you

Get in touch if you have a question or would like to explore how our solutions could help your organisation.

Get in touch