Earn 5.18% AER (variable) with the Plum Cash ISA (Ts&Cs and ISA rules apply).
One in three expect to be still be paying for housing in retirement
26 July 2023
Wednesday 26th July – London, UK. Almost a third of working people (31%) expect housing costs to be one of their top expenses after they retire, according to new research from the smart money app Plum*.
People aged 35-54 showed particular concern about rent or mortgage payments in retirement, with 35% expecting these costs to be in their top three expenses. Meanwhile younger people aged 18-24 are expecting that they will be paying for healthcare during their later years, with one in four (25%) stating that this would be one of their top expenses.
The research also showed pessimism around potential retirement ages. On average, respondents wished to retire at 61 but expected that they would retire at 68, notably higher than today’s average retirement age of just under 65.
Only 5% of respondents think that the state pension will be enough in retirement, and are therefore looking at other saving methods to plug the gap. Cash savings was one of the most popular methods for saving for retirement, with 58% saying they would use this method. This contrasts with just over 1 in 4 (26%) considering investing in stocks and shares to fund their retirement, perhaps a reflection of current worries about turbulence in the stock market.
Two thirds (66%) of respondents, however, plan to save into a pension to fund their retirement. Just under half (46%) said they would like to save into a workplace pension, and a further fifth (20%) plan to save into a self-invested personal pension. This suggests that despite auto-enrolment being in force since 2017, awareness of workplace pensions may still be low in some segments of the workforce.
Less common forms of investment are also being considered. 1 in 10 (11%) are considering investing in cryptocurrency to help fund their retirement, increasing to nearly 1 in 5 (18%) of younger respondents aged 18-34.
Commenting on the findings, Plum CEO Victor Trokoudes said: “Housing costs in the UK are among the highest in Europe, taking up a larger proportion of income each month. Anyone with a mortgage is looking at interest rate increases and potentially having to increase the term of their loan, while renters have also seen their costs go up massively, making it more difficult to save for a house deposit. The result is that people expect to still be paying for housing in retirement.”
“Furthermore, our research found that most people are aware that they need to actively save for their retirement. Only a very small amount feel the state pension will be adequate. It’s good that people are being realistic, and thanks to this raised awareness and the auto-enrolment scheme, more people are saving into a pension and benefitting from the tax benefits associated with them. This will put them on the right path for a comfortable retirement.”
“Young people are well placed to use this awareness to boost their retirement fund with diversified investments, as they have more time at their disposal to grow their money as much as possible. It’s interesting to note that many are exploring crypto as an option, as technology has made it much easier to access these different types of investments according to your risk appetite.”
-ends-
*Unless otherwise specified, all data is from research conducted by DMGT of 784 part time and full time workers, June 2023
Plum is money, motivated. We’re the ultimate smart money app, with the mission to make wealth building automatic. Founded in 2016 by Victor Trokoudes (ex-Wise), Plum automates parts of personal finance that people find difficult or don’t have time for, helping them save, invest, budget and manage their spending. Plum has over 1.5 million customers across the UK and EU, helping them set aside more than £1.5 billion. Plum was named the UK’s Best Personal Finance App in the British Banking Awards 2023, and came fifth in the 2022 Deloitte UK Technology Fast 50, a ranking of the 50 fastest-growing technology companies in the UK. Plum is headquartered in London, UK, and has offices in Athens, Greece and Nicosia, Cyprus.
For more details, or to speak with Susanna Wood, contact:
Susanna Wood
susanna@withplum.com / press@withplum.com
+44 (0) 780 4253 709