19 May New study reveals how COVID-19 is affecting retirement savings
Saving for your retirement is an important aspect of financial planning. If you plan on living out your retirement years comfortably and without any nasty surprises, then saving is a must.
But currently, the coronavirus outbreak has hit all aspects of our lives, with many Brits concerned about their jobs, outgoings, debts, retirement and many other financial impacts. With seven in ten Brits fearing for their finances(1), and as the epidemic worsens, it is set to have long-term effects on personal finances.
The latest figures by Blacktower Financial Management Group show that you need to save £375,676 to retire comfortably on an income of £26,834 per year. But, how is COVID-19 impacting retirement savings?
COVID-19 impact on retirement savings
COVID-19 is having a big impact on global financial markets, and this can be hard to watch if the value of your personal savings is falling. This is causing fear and uncertainty amongst Britons, as we don’t know what the lasting impact will be. But it’s important to remember that pensions are a long-term investment, and it’s normal for the value of investments to move as the economy goes through phases of fluctuation. History has shown us that values go up in the long-term, despite short-term ups and downs.
Pensions are normally mixed in several assets such as bonds and commodities, to spread the risk and reduce impact. The UK government bonds have seen a positive return over this unsettling period due to a rise in demand. Pensions are a long-term investment, so it’s important to look beyond the disruption.
The best way to boost your pension during the pandemic is to try and make monthly payment contributions, even if you pay a smaller amount for the time being.
If you’re thinking of switching investments or taking money out of your pension pot, it is recommended that you speak to an experienced financial advisor as making drastic decisions in the short term can be a risky thing to do. Speak to an advisor who can help make your investments safe and stretch further.
Are you on track with saving?
The latest figures by Blacktower Financial Management Group reveal that you need to have saved £375,676 to retire on an income of £26,834 per year (the amount needed to live comfortably in the future). The pandemic is certainly going to cause added fear when looking at the amount you need to have save for retirement . The best way to boost your pension is to try and make monthly payments that your one step closer to the long term goal.
Millennial’s in their early thirties should have already put away over £70,000 if they want a stress free and happy retirement. Even 25-year olds with an average of just a year of full-time work under their belt need to have already saved £15,745 regardless of what else they are paying for according to Blacktower.
In reality, Britons under 34 have only saved around £1,000 for retirement.
Check your age against the amount you need to save, and what you should have currently saved to find out if you’re on track:
Top tips for keeping your finances healthy during COVID-19
To help keep your finances healthy during the pandemic, Blacktower Financial Management have revealed a range of top tips:
1. Get into the habit of saving, no amount is too small to put away
2. Set a budget and stick to it
3. Track your spending to identify small ways to save
4. Cut spending in every category just a little bit, from unused subscriptions, to grocery shopping, and adjusting your house thermostat
5. If you’re experiencing financial difficulty, it’s important to get financial help