One in ten adults uses a piggy bank to save for retirement
One in 10 UK adults is using a piggy bank to save for their retirement, according to new research from Aviva. A delve into the nation’s savings habits shows that while UK adults mostly class themselves as savers (56%) rather than spenders (44%), there are some interesting insights when it comes to where people stash their hard-earned cash.
This is particularly true when it comes to retirement. While an employer pension is the most popular vehicle used to save for retirement – the choice of 29% of respondents – this is closely followed by cash ISAs (20%) and standard bank / building society accounts (18%).
Incredibly, almost one in 10 UK adults (8%) actually keep some of their retirement savings as cash, using a piggy bank or similar. A further 7% say they are investing in property for their retirement – rising to 11% in the 35-44 age group – and 2% are investing in the likes of art and antiques to secure an income in their later years.
The research, which has been carried out to support Aviva’s new consumer platform, also suggests that four in 10 UK adults (40%) are not saving for their retirement at all. Unsurprisingly, this peaks amongst those aged 18-24 (58%) and those over 65 (55%), but between ages 25-64, a worrying one in three say they are not saving for retirement at all.
Where are UK adults investing for their retirement?
1. Employer pension (29%)
When it comes to saving more generally, bank and building society savings accounts are the most popular places to save, with two thirds of the nation (66%) using them. Cash ISAs are a preferred option for nearly half of UK adults (46%) but a third (32%) are shunning potential interest gains by keeping some savings in a piggy bank.
Almost half of the nation’s adults (45%) say that they save on a monthly basis, with one in three (32%) saying they have a specific purpose in mind for their savings. Holidays and rainy day funds are the most popular reasons for saving across all age groups, but purposes vary according to life stage:
People aged 18-24 are most likely to be saving for travel plans (41%) or a house deposit (35%), while those aged 45-54 are more focused on saving into a pension (41%) and building a rainy day fund (43%).
Rodney Prezeau, consumer platform managing director for Aviva says: “It’s fantastic to see that so many people have got into the habit of saving. However, it’s worrying that many who are investing for the long term seem to be putting their cash into vehicles which are generally more suited to shorter term savings.
“To put this in context, £100 invested 20 years ago in a 90-day notice savings account would be worth £188 today, but would only buy £74 worth of goods in 1995 terms. In other words, by investing in a deposit account over the last 20 years, someone’s spending power has fallen by more than a quarter. But if £100 had been invested instead in the FTSE All Share, this would have generated £371 in 2015 which would have spending power of £146 in 1995 money. This illustrates how, over the long term, investing in shares can help money to keep pace with – and even beat – inflation.
“Cash ISAs certainly have their place, but we’d encourage consumers to look at long term benefits if they are planning to save for many years or even decades, for example if they’re putting money away for retirement or for children’s university fees. A stocks and shares ISA with its tax advantages is one of the ways people can save if they have a long term goal in mind and don’t need instant access to their savings.”
Aviva’s direct-to-consumer online platform is available to customers who want to self-manage their investments, particularly as they plan for their retirement. The initial product range includes investment account, ISA, and SIPP, with access to more than 2,000 funds, plus income drawdown functionality.
Full news release on www.aviva.co.uk
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