SECRETS, LIES AND THE GENDER AGENDA: THE INTERACTIVE INVESTOR GREAT BRITISH RETIREMENT SURVEY 2019
- More than half of people do not know how much debt their partner has.
- In the dark – almost a third (31%) don’t know how much their partner earns.
- Women are more likely than men to admit to lying about the price of things they have bought (11% versus 4% of men).
- Money talks? Almost a third (32%) of those in a relationship only talk about money with their partner once a month.
- Leaving an inheritance is a top priority for 35% of respondents, although only 25% admitted to having written a will and, shockingly, 70% of retired respondents have no lasting Power of Attorney.
- Doubts about lifestyle: Less than a fifth (17%) of women are confident they will be able to maintain their standard of living in retirement – and just 30% of men.
- Big adjustments: over a third (37%) of women say they will need to make major lifestyle changes to maintain their standard of living in retirement, compared to 18% of men.
- Work ‘til you drop: more than half (52%) of non-retirees plan on staying in work after retirement as are one in four (25%) current retirees.
- Men are more than twice as likely as women to work in retirement for enjoyment, and women twice as likely to work out of financial necessity.
- Regrets: not starting a pension sooner is a regret for 17% of respondents, while 32% of non-retired regret not saving enough generally.
interactive investor, the UK’s second largest investment platform, has published the interactive investor Great British Retirement Survey, a comprehensive study exploring the attitudes and experiences of 10,000 Brits approaching or in retirement.
The study blows a hole into the image of retirement that frequently verges on the cliché: of tanned, silver-haired couples smiling from golf courses and cruise ships. Almost two-thirds of respondents disagree that retirement is a time of pleasure, and financial worries loom large.
One rallying conclusion is the need to address the ‘gender agenda’. Men are twice as likely to work into retirement for enjoyment (34% versus 14%) and women more likely to do so for the money (41% versus 20%). Meanwhile, retired women are more than twice as likely as men to say they are just getting by financially.
No slowing down
But there are some real positives. Far from seeing it as a time to take the foot off the pedal, one in 10 consider retirement as an opportunity to get back into studying, while 29% look at starting a new business or pursuing new hobbies. Some 52% of respondents said they will do voluntary work for their local community when they retire and 35% of retirees said they do unpaid voluntary work. And then there’s the free childcare: 18% say they look after grandchildren and count this as unpaid work.
Some 20% of respondents consider travel/ holidays as their greatest retirement priority, followed by spending more time with family (15%) and more exercise/ sport (10%).
Fear of a stock-market crisis is a big concern for those currently in retirement (42%), ahead of running out of money (35%), tax issues (24%) and not been able to help younger family members with large expenses (24%).
While running out of money is the most common concern among pre-retirees (26%), only 3% of respondents – both retired and non-retired, regret helping their children financially. Some 27% of respondents with children say they have gifted money for house deposits, whilst 8% have loaned the money.
Moira O’Neill, Head of Personal Finance, interactive investor, said: “This survey presents a more nuanced picture of what retirement (and the run up to it), looks like in Britain. Holidays and travel, and having more time for friends, family, hobbies and voluntary work, are all top priorities for both men and women – but there are some big secrets too, with half of couples having no clue how much debt their partner has.
“It’s not just financial uncertainty, either – 70% of retired respondents have no lasting Power of Attorney, which can wreck real havoc if unexpected health issues crop up. Many of our retirement priorities take significant planning and, overwhelmingly, this research finds that peace of mind, not running out of money, and having enough money to leave behind to children are all top objectives. In other words, many want to have their cake and eat it – but it is women in particular who are more likely to be left with just the crumbs.
“Overwhelmingly, this research puts real flesh on the bones of the gender pension gap and it is concerning. The inescapable truth is that many women are facing a retirement of financial hardship which is having a real and lasting impact on their quality of life.”
As well as wealth, women are more likely to be pessimistic about the state of their relationship with their partner in retirement, with more women likely to say it will worsen than men (6% versus 4%). Overall, though, 34% of couples think their relationship in retirement will improve, and 57% think it will stay the same.
Talking about money
The research found that almost a third (32%) of those in a relationship only talk about money with their partner once a month – or less. And for 5% of non-retired couples, talking about money is as rare as hens’ teeth: 5% say they only discuss money at pivotal times of the year like birthdays and Christmas, and 4% say they never talk about money.
But talking about money is not taboo for everyone – 27% of couples talk about money once a week – and 26% said they do so a few times a week. Another 6% said they discuss money daily.
Even with this variation, 69% are confident they understand their partner’s financial position. More women than men (72% vs 67%) know how much their partner earns, but men have a better idea of how much their partner has in savings and investments (80%, versus 74% of women). However, more than half of male (52%) and female (51%) respondents do not know how much debt their partner has. Some 26% of couples each have totally separate accounts, whilst 18% have just a joint account and 56% have a combination of the two.
Money management is boring?
More than a third of women (34%) describe money management as a chore compared to 15% of men, although 21% of women said it gives them a sense of satisfaction – half the number of men (40%).
Fitting it in
Fitting money management into their schedule seems to be more of an issue for women than men. Overall, most people think they have time to adequately take care of their own finances (87%), but almost a fifth of women (19%) said they do not, compared with 9% of men. Retirement makes a big difference – 97% of retirees said they have enough time for money management compared with 75% of non-retired.
Men are more confident that they are sufficiently well-versed to manage their finances than women (79% versus 56%) and tend to spend more time on it. Women (30%) are twice as likely than men (14%) to spend less than an hour a month managing their finances. In contrast, 29% of men said they dedicate up to six hours a month to managing their finances, compared with 12% of women. On average, one to two hours a month was the most common length of time people spend managing their finances (30%).
This does not bode well for the income potential of women at retirement. Our research found that almost half (48%) of non-retired men already do, or plan to, derive some of their retirement income from stocks and shares ISAs, compared with just 18% of women.
Regrets and uncertainty
There are financial consequences to this apathy – 36% of non-retired women regret not saving enough, while 33% have no idea what their income will be in retirement. As for men, 28% of the non-retired regret not putting enough money away, with 19% unsure of what their income will be in retirement.
In addition, 32% of women believe the overriding meaning of retirement is uncertainty around their levels of wealth compared to 17% of men.
Overall, not starting a pension sooner is the biggest financial regret among 17% of respondents. Around a third (32%) of non-retirees rue not saving enough more generally and 12% regret sitting on too much cash and not being invested in the stock market. Poor investment decisions is also a top financial regret among respondents (17%).
When it comes to lifestyle, just less than a third (30%) of men are very confident they will be able to maintain their standard of living when they retire, compared with just 17% of women. Some 37% of women and 18% of men say they will need to make major lifestyle changes to maintain their standard of living. But while just 7% of men believe their lifestyle will worsen, nearly double the number of women (13%) expect it to.
Final salary pension = peace of mind
interactive investor’s research also identifies a direct link between holding a final salary pension and greater peace of mind at retirement. Two-thirds (66%) of those without a final salary pension have a vague or no idea about what their income in retirement will be, compared with 44% of those with a final salary pension.
Some 31% of those without a final salary pension say they will need to make lifestyle changes to maintain their standard of living in retirement, compared to 19% of those with a final salary pension.
Some prefer a DIY approach
Only 19% of non-retirees opted to hire a financial adviser for retirement guidance, with most favouring a DIY approach. This included online research (42%), reading the financial press (28%) and using a Government-sponsored guidance service such as Pension Wise (23%).
Retirees, meanwhile, tend to prefer professional finance advice, with 29% paying a financial adviser on an ongoing basis. But this still ranks behind DIY online research (44%) and the financial press (34%), with only 11% looking to family and friends.
Which generation has it tougher?
Far from “avocado shaming”, the research identifies a mix of feelings about which generation has had it tougher. More than half (51%) of respondents said that, when it comes to money, younger generations have a tougher time than they did – although 29% thought the opposite and there were some colourful verbatims, published in the report, that show that many respondents were conflicted in their own minds.
But while most respondents expressed an explicit desire to leave some form of inheritance to their children, many have dithered around practical estate planning. A quarter (25%) admitted to not having drafted a will (compared to 12% of those retired), while 26% said they have one written, but that it requires reviewing (similar to those retired at 27%).
One of the more shocking statistics is that 70% of retired respondents admit to not registering a lasting power of attorney (88% amongst the non-retired).
Working in retirement
Retirement might seem like a time to take the foot off the pedal, but many of us have no plans for a complete life of leisure. The study found that more than half (52%) of non-retirees plan to keep working into retirement, either part-time or through self-employment. Men are more likely to work for enjoyment (34% versus 14%) and women more likely to do so for the money (41% versus 20%).
There was also a significant appetite among respondents to do their bit for charities and communities through voluntary work. Some 52% of respondents said they will do voluntary work for their local community when they retire and 35% of retirees said they do unpaid voluntary work whilst 18% say they look after grandchildren and count this as unpaid work.
Health and long-term care
The key retirement worries change with age. Healthcare, for example, becomes a more prominent concern among older respondents. Not being able to afford good quality long-term care is the main fear of among a quarter (24%) aged between 71 and 75 compared to 12% of under 50’s.
Money worries frequently dominate – even among those who have budgeted and saved prudently for life. While running out of money is the most common concern among pre-retirees (26%) – above rising living costs (23%) – health and long-term care also dominate, with the inability to pay for good-quality long-term care a primary concern for 10%. Being unable to afford healthcare should they need it and having to spend inheritance earmarked for children on long-term care fees, are primary worries for 8% and 9% of respondents respectively.
Full recommendations and conclusions are published in the report, and include:
- Tackling inequality right from the start with more dedicated, joined up and resourced financial education in schools.
- Target pensions inequality throughout our lives, and introduce pension ‘Wake Up Packs’ not just at 50, but well before – at key life stages such as the start of a new job or birth of a child. Nobody wants their finances to sleep until they reach 50.
- Get auto-enrolment working better for everyone – lowering the minimum age limit to 18 sooner rather than later. The Government’s mid-2020s ambition is lethargic and risks leaving a whole generation behind.
- Widen the £10,000 earnings threshold for auto-enrolment to those working for multiple employers, liberating workers who might have several part-time jobs – many of whom are women.
- Government-led public education campaign aimed at women to help kick start a savings and investment culture.