Almost half - 48 per cent - of UK consumers have been classed as having an "ostrich mentality" as they significantly underprepare for their retirements, according to data from Skipton Building Society.
Skipton surveyed 6,000 UK adults in October 2016 for its retirement tracker, a new piece of research by the society, which revealed 49 per cent of UK non-retirees admit they have no idea how much they'll need to save to fund their retirement.
Consumers are grouped into distinct saving categories through the tracker methodology according to household income, how much they are using to fund their retirement and retirement preparedness.
These are wise owls, squirrel savers, money moles, savings snails or the ostrich mentality.
According to Skipton's data, UK consumers are most likely to fall into the ostrich mentality category, a group which is not saving for their retirement or their savings are falling short, and they do not have anything in addition to the state pension.
A total of two thirds - 66 per cent of the ostrich category - admitted they choose not to save because they cannot afford to, when asked why they were not saving appropriately for the future.
However, of those with savings that are currently falling short, 38 per cent believe they’ll be nowhere near their savings target by the time they retire.
More than half of non-retirees - 51 per cent - have not yet saved anything to fund their retirement and half - 49 per cent - have no idea how much they need.
Over a third - 38 per cent of people surveyed - said they can’t afford to save and 13 per cent admit they choose not to.
Only 6 per cent of the people surveyed have been categorised as “wise owls” in the tracker. This group tends to have a more sophisticated portfolio with a broad range of investments and savings.
Additionally, nearly half - 47 per cent - of the group are saving to fund their retirement through a cash Isa, over one third - 37 per cent - through a personal pension, 32 per cent through stocks and shares investments.
The group are the most likely to use cash savings to fund their retirement - 55 per cent of wise owls, compared to 41 per cent of squirrel savers and 27 per cent of savings snails.
Across the rest of the UK, Skipton’s data shows that it is a mixed picture when it comes to retirement saver types.
Only 6 per cent of the sample are classed as squirrel savers, meaning that they are on track to meet or exceed their savings but have a less sophisticated portfolio in comparison to the wise owl group.
The data shows that the majority - 72 per cent - of this group are relying more on their company pension to fund their retirement than other investment and savings options.
A total of 21 per cent of non-retired people are classified as money moles, which shows that they are saving without a set target but have at least one of the following to support them – a company pension, cash Isa or are over paying their mortgage.
Two in five - 42 per cent - of money moles have sought financial advice.
Jacqui Bateson, senior propositions manager at Skipton Building Society said when it comes to personal finances, it’s easy to focus on the here and now, not the future.
She said: "However, when it comes to planning for retirement you cannot bury your head in the sand and avoid the fact that you will need to save something on top of the state pension. Our new retirement tracker reveals that the UK is very much a nation of "ostriches” shying away from the reality of saving for their retirement.
“At Skipton, we’ve been helping people to lift their heads up and plan for their life ahead for 163 years and we want to help build the UK into a nation of Wise Owls and Squirrel Savers as much as we can.”
ruth.gillbe@ft.com
