Great British Retirement Survey 2023: out now

• Financially exposed: three-quarters (76%) of the self-employed are paying nothing into a pension, and 38% don’t have a pension at all
• One in five people under age 40 expect their state pension age to be 75 or over
• A rising tide of unsecured debt is hitting 39% of UK adults, and it’s impacting retirement contributions
• 67% of women aged 41-55 believe they will never retire
• Older and middle-aged people are recognising the generational wealth gap, with 16% of over 40s planning to give a “living inheritance” in the next three years
• We are talking more. Over half (52%) the nation say they openly talk with family about retirement and savings, up from 47% last year. More people are talking to friends, too.

interactive investor, the UK’s second-largest investment platform for private investors, is proud to publish its fifth Great British Retirement Survey*. 

With a sample size of 9,000, and 100 detailed questions, it is one of the largest retirement surveys of its kind. Research was conducted for ii by Opinium Research between May – July 2023.

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The cost-of-living crisis continues to cast a long shadow.  It is by far the biggest worry across all age groups, and more than half (57%) cited it as a major financial concern.

Running out of money was a major concern for 38% of respondents, dropping to 24% of people of pension age.

Not saving enough for retirement was the third-biggest worry among one in four (26%). Anxiety peaked among the 41-to-55 age group – that is, those edging closer to retirement.

Richard Wilson, CEO, interactive investor, says: “While a comfortable retirement increasingly rests on the individual, the threads of love and care that bind generations together are strong. The impulse to pass on wealth and help those we love is palpable.

“Three pressing concerns dominate: the rising cost of living, running out of money, and not saving enough. We have expanded our range of great value subscription plans this year to help even more people build long-term financial resilience.

“At a policy level, government may need to look again at contribution levels, and while the state pension age is emotive and difficult, regional health inequalities should be part of the conversation.  We are also crying out for a joined-up financial education strategy in the UK and we want to see collaboration between HM Treasury, Department of Education and the FCA.

“Good pension outcomes rely on three things: state pension to provide a basic income, combined with workplace and private pensions, boosted by pension tax relief. To rebuild confidence and energise the nation's pensions savings, the integrity of those three things remains key in an ever-changing world.”

The state and the nation

ii could have filled its entire report on the state pension, such was the level of feeling. Confidence that the state will provide is a key issue, with one in five people under age 40 predicting the state pension age will increase to 75 or over in the near future. 

As part of ii’s policy recommendations, ii argues it is important to recognise the profound impact of regional health inequalities on the state pension, and this is something we believe policymakers should keep in mind as they grapple with the difficult issue of the state pension age.

• State pension for the young: less than half (46%) think the state pension will still exist by the time those now in their 20s come to retire, while nearly one in three (31%) said it would not exist at all in any form. Middle-aged workers have the bleakest outlook with only 37% of 41-55 year olds believing the state pension will still exist for today’s young people.
• State pension age: most think the state pension age will rise significantly, with respondents believing today's young people will get their state pension at an average age of 71. Most (51%) said it would first apply between the ages of 70 and 74, with 16% thinking it would not become available until the age of 75 or older.
• Retirement expectations: 56% of those aged 41 to 55 think they will never retire, rising to 67% of women aged 41-55.

Financial stress is affecting mental health: 41% of respondents identified finances as the external factor most impacting their mental well-being. This rose to 49% of people aged 40 or under.

We need to talk

But if you take the view that a problem shared is a problem halved, there are reasons to feel optimistic, too. We are talking more. Speaking to family is the preferred starting point, and over half (52%) the nation say they openly talk with family about retirement and savings, up from 47% last year. And we’re also increasingly likely to talk to friends, too (37%, up from 34% last year).

Many people feel confident about managing their own retirement finances: 57% of respondents reported confidence in their own ability to manage their retirement finances, with older respondents the most confident. Social media is continuing its rise as a useful source of pension information among the working population: 30% now see social media as a useful information source – up from 26% last year.

The Great British wealth transfer and the rise of “living inheritances”

The great generational wealth transfer is in full swing as the older generation sacrificially help out their family.

• Living inheritance: A tenth of over-40s said they had given a “living inheritance” in the past three years and 15% had among those aged over 65. Some 16% of respondents over 40 are planning to gift money during the next three years.
• The most common reasons for having given a living inheritance were to see the benefits during a respondent’s own lifetime (40%), helping with either a deposit on a home (28%) or the rising cost of living (32%).
• Inheritance tax and avoiding further taxes at death was a prime motivation among members of the interactive investor community (44% of those who had gifted), as well as wanting to witness the benefits of giving.
• 50% of over-65s have already received an inheritance
• Nearly one in four (37%) of over 66s have helped their adult kids get on to the property ladder.

But inheritances aren’t significantly moving the dial when it comes to retirement plans.

• Although 54% of respondents expect to inherit, only 12% say inheritance will form part of their retirement plans.
• People who expect to inherit are retiring 18 months earlier on average, with those with high incomes retiring three years earlier
• The average inheritance is £54,000, although people expect to inherit £110,000 on average.

Alice Guy, Head of Pensions and Savings, interactive investor, says: “The Bank of Mum and Dad, and Grandma and Grandad, is alive and well, with many aware of generational inequalities and passing on wealth to help their younger family members build financial resilience.

“Our research shows that, far from being a generational battle, we are all on the same side, with many parents and grandparents making sacrifices to help the next generation and giving generous “living inheritances” to their loved ones.”

Rising debt levels and pension wealth is suffering

People have more debt and less ability to save into their pensions than last year, with young people and the self-employed particularly struggling.

• More unsecured debt: continuing financial pressure is forcing Britons to take on even more debut (39% versus 36% last year)
• Of those with unsecured debt, a quarter (24%) say it is impacting their ability to save for retirement compared to 14 last year
• Banking pension wealth: more older workers (55+) are stashing their pension lump sum in their bank account or cash ISA. 39% of those taking a pension tax free lump sum paid it straight into a bank or savings account (up from 33% last year) and 25% are using it to pay off debt, up from 22% last year.

The young  and self-employed 

• Impact of debt on pension saving: Some 51% of younger people (age 22-40) have unsecured debt (compared to 47% last year). Of these, 32% are saving less in their pension than they would like due to unsecured debt, up from 22% last year.
• 38% of under 40s have had a major life event in the last three years that has changed their future retirement plans.
• Self-employed workers are often more financially vulnerable, with almost no pension wealth: 45% of self-employed workers have had a major life event in the last three years that has changed their future retirement plans, 76% are not currently saving into a pension, while 38% have never saved into a pension.

Alice Guy, Head of Pensions and Savings, interactive investor, says: “It’s sad to see that so many people are surviving rather than thriving, with more taking on unsecured debt, especially among young people. More than a quarter of us (28%) have had to access our savings or pensions sooner than planned to help manage current outgoings and one-quarter are using pension lump sums to pay off debt.

“Worryingly higher levels of debt are having a knock-on impact on pension saving with one-third of under 40s contributing less than they would like to their pension due to debt. The cost-of-living crisis will cast a long shadow and dampen the ability of today’s young and middle-aged workers to reach a comfortable retirement.

“Many self-employed workers are facing an uncertain future. More than three-quarters are not currently saving into a pension, while four in 10 have never saved into a pension. The vast majority of employees are now saving into a pension, but self-employed workers are still falling through the gaps, as auto-enrolment doesn’t apply to them. They are also much more vulnerable to financial shocks as they don’t receive sick pay or have paid holiday and were disproportionately affected by the Covid crisis.”

Silver exodus of people in early 60s continues

More over-60s are retiring.

• The silver exodus is gathering pace with 49% of 61–65-year-olds retired today, compared with 45% last year. In addition, the number working full-time has further reduced from 29% to 23%.
• 44% of 55–65-year-olds say their well-being has improved since retirement, compared to 31% of over 65s
• 45% 55–65-year-olds whose well-being has not improved say it is due to money worries, compared to 20% of over 65s
• 33% were able to retire early due to savings, followed by 25% final salary pension, 25% partner’s income, 19% defined contribution pension and 14% inheritance.

Alice Guy, Head of Pensions and Savings, interactive investor, says: “Despite the best efforts of policymakers to lure back older workers, we’re not seeing a return to the workplace among those who quit doing the Covid pandemic. Those not working in their late 50s are now more likely to label themselves as retired, suggesting they don’t intend to return to work, and there’s been a stampede towards retirement among those in their early 60s.

“Only one in five of those in their early 60s is now working full time, as more people choose to hang up their boots well before the state pension age. Four in 10 of those retiring early say their well-being has improved since retirement. Many people spend years looking forward to retiring and are willing to make financial sacrifices to make it happen. Others are worn out after years of working or are forced into retirement due to ill-health or caring responsibilities.”

Mind the gender pension gaps

Women have significantly lower pension provision than men: Women are 14 percentage points less likely to have any pension pots than men (72% of women of working age, compared with 86% of men). They expect £8,000 less in pension income (£17,200, versus men’s expectation of £25,200).

Women’s pension assets are affected by the fact that women are more likely than men to spend time outside the labour market or be in part-time employment to undertake unpaid caring for young children or relatives. The gender pay gap feeds through to a pension gap.

According to the ONS Wealth and Assets Survey[1], the average amount accumulated by men who have private pension savings by the age of 55 to 64 is £228,200 – 50% higher than that accumulated by the average woman with private pension wealth at the same life stage (£152,600). This is further compounded by the fact that a smaller proportion of women have any private pension wealth at all.

Within our data, 28% of women have a don’t have a pension pot compared to 18% of men.

It was shocking to find that 67% of women aged 41-55 believe they will never retire.

Regional differences – Most likely to…

[1] https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/pensionwealthwealthingreatbritain