UK workers overestimate pay days left until retirement

• Around 9 million UK workers have no idea how many pay days they have left until retirement.
• 17% of over 55s believe they have more than 250 pay days left – the equivalent to 21 years.
• More than a quarter (28%) feel concerned, and nearly one in five (18%) admitted they are shocked by the number of pay days they had left. 
• Nearly a quarter (24%) admit they don’t know how much they would need in their pension pot to live comfortably in retirement. 

Aviva’s latest research reveals a surprising gap in retirement planning among UK workers. The survey, based on employees being paid monthly, found that while many people think about the age they want to retire, or the amount they hope to have saved for their retirement, few consider the actual number of pay days left to achieve those goals. In fact, more than a quarter (27%) of workers – the equivalent of around 9 million people – have no idea how many pay days remain before they intend to stop working.

The findings show that this lack of awareness becomes more noticeable with age. Almost a third (31%) of those aged 55 and over admit they don’t know how many pay days they have left, and amongst those aged 45 to 54, the figure rises to 35%.  

Even more worrying, is that some older workers drastically overestimate the time they have left to save.  Just over one in six (17%) people aged 55 and over, who could claim their state pension in around 12 years, believe they have more than 250 pay days left – the equivalent to 21 years of monthly pay cheques. A further one in 20 (5%) think they have over 500 pay days left, which would mean working for another 41 years.

Interestingly, younger workers appear more proactive than most, with more than a third (36%) of 25 to 34-year-olds having already calculated their remaining pay days, the highest proportion of any age group – which coincides with a previous Aviva survey where it was identified that 25-34 year olds are the most goal orientated and confident in their finances.

When asked to reflect on the number of pay days they have left, emotions ran high amongst respondents. More than a quarter (28%) overall said they felt concerned, and nearly one in five (18%) admitted they are shocked. However, on a positive note, a quarter (25%) said the realisation of how few they had has motivated them to take action. Younger workers are the most likely to feel both shocked and motivated, with 33% of 25 to 34-year-olds saying they are surprised by the number, but 36% feel inspired to do something about it.

The research also explored retirement expectations. On average, UK workers expect to retire at 64, but this optimism fades with age with almost three in five (59%) of those aged 55+ believing they will retire at 65 or later, and one in ten expect to work beyond 68.  Overall, one in ten (10%) workers "don't think they'll ever fully retire" but at the opposite end of the scale, 6% are confident they will retire before 60.  Almost half (45%) of those furthest from retirement age, aged 18–24-year-olds today, are confident they will retire between 60 and 64.

Confidence in pension savings varies widely. Nearly seven in ten (69%) 25 to 34-year-olds feel confident their pension will be sufficient to see them through retirement, compared to just two in five (41%) of those aged 45 to 54 and 46% of the 55 and overs.

Alistair McQueen, Head of Savings & Retirement at Aviva, said:

“Counting pay days is a simple but powerful way to bring retirement planning into focus. Many people overestimate how long they have left to save, which can lead to shortfalls later. Thinking in terms of paydays makes the challenge feel more real and immediate.  If you believe you have hundreds of pay days left, you may delay acting – but the reality is often very different. We encourage everyone to take stock now, review their pension contributions, and consider what steps they can take today. The sooner you start planning, the better prepared you’ll be for the retirement you want.”

When it comes to monitoring progress in pension performance, habits vary widely – One in six (16%) never check their pension pot, and a further 17% only check it annually.  But, a half (51%) say they do review their savings quarterly or more, with younger workers leading the way – with two thirds (67%) of 25 to 34-year-olds checking at least quarterly, and 17% of them check weekly.

A quarter (24%) of people admitted they didn’t know how much they would need in their pension pot by the time they retire. Almost a third (30%) believe they could live on less than £250,000 – a figure that would buy an annuity of around £13,700 a year at today’s rates, or £1,145 per month.   

See Aviva’s retirement planning tools and annuity calculator here for further details.

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