Demographics are shifting. One in five people in the UK is aged 65 or over, and that’s set to rise to as much as one in four within the next 50 years. With an ageing population, it’s more important than ever that people are financially ready for their retirement, but unfortunately, not enough of us have enough set aside.
Research from the charity Living Wage Foundation suggests that over half of Brits (53%) worry they won’t ever be able to retire, despite auto-enrolment into workplace pension schemes. And that worry isn’t turning into action for a whole host of reasons.
First of all, there’s the expectation that workplace pension schemes and the state pension will be enough to provide a good quality of life for ten or twenty years post retirement. But even with auto-enrollment and the government’s pledges to triple lock pensions, retirees are facing a significant shortfall compared to their working wages.
Secondly, there’s confusion around private pensions. People don’t know how much to save, how what they’re saving today will translate into a monthly or yearly income down the line, or how to keep track of their progress.
Finally, there’s a reluctance to discuss financial matters with friends or family. Without the ability to have an easy, frank conversation about the future, there’s no way for people to influence or incentivise others to take that all-important step and begin planning for a life after work.
Does technology have the answer?
Companies such as pension and ISA providers mynestegg believe that technology is the key to solving all three of these issues, educating the British population on the importance of pensions, making it simpler to plan and save for the future, and making it easier to have those crucial financial conversations.
Technology can make it easy to see how much an individual will have to live off after retirement. By using quick and easy calculators, savers can see within seconds how much their current pension savings will deliver as a future income. By making it easy to see that the state pension and auto-enrolment schemes provide only a few hundred pounds a month, technology can help people to understand that their current savings plan isn’t enough for the kind of requirement they want.
By taking that same calculator technology and adding it to an easy-to-use app, providers such as mynestegg make it far simpler to see how what they save today will grow over time and produce a more comfortable income in future. By removing the need for financial advisors or other third parties, technology makes saving simpler and reduces the cost to open and run a pension – meaning there’s more in the pot for future income.
And an app makes it easier to have discussions around finance. The vision for tech-forward savings companies is for people to be able to sit in a coffee shop, or a pub, or around the kitchen table, open up their savings app and show their friends that they’re on track for an enjoyable retirement. It’s not just about making it easier for a user to track their own progress – it’s about sharing so that everyone can enjoy a financially secure future.
Technology is helping to create a new mindset about pensions. It’s a mindset that wants to turn worries around saving for retirement into celebrating the fact that tomorrow is being looked after by making the right choices today.
Whether they’re dipping their toes into saving with an ISA, or planning for the long term with a reliable pension, savers will be able to take the steps they need to make sure they’re not worried about the future.
Instead, they’ll be looking forward to it, while sitting on a comfortable nest egg of their own.
