BRITONS are failing to make saving for their old age a priority as they fall into a short-term saving trap, experts have warned. Two in five people think saving for a potential emergency is more important than any other financial milestone.
And less than a third view saving for a pension as a priority while 26 per cent are stashing cash away for their summer holiday, according to new research by the Foresters Friendly Society.
This long term saving gap is particularly significant amongst millennials (those aged between 18–34) who stand most to gain when thinking further into the future.
Saving for retirement ranked even lower on their list of priorities with just 16 per cent building up a pension pot, despite generous employer contributions and tax breaks.
Tom Selby, the senior analyst at AJ Bell, said: “While rising consumer spending might be good for the UK economy, it risks storing up serious long-term problems — particularly if it is driven by cheap loans and rising consumer debt.
“Even recently, defined contribution savers were, on average, putting away just one per cent of their salary — a reduction from the 1.5 per cent level seen in 2015.”
The research found short-term savers also ignoring higher interest long-term options for their money.
More than a third of UK adults use standard savings account as their preferred way to save while 27 per cent opt for cash ISAs and 15 per cent just use their current accounts.
But with interest rates at just 0.5 per cent, these accounts offer savers paltry returns.
Accounts which require savings to lock their money away for a longer period of time offer higher interest rates but only nine per cent, for example, are taking advantage of the Lifetime ISA (LISA), developed specifically to help those under 40 years old achieve their long-term savings goals.
For more information on Retirement, read my recent blogs “Investment patterns during retirement” and “Financial advice will help boost retirement savings”
Blog originally published by Express.