The trend in investments surprisingly reflects a relative lack of preparation amongst the over-55’s, with 40% citing no investments – although 36% are using their ISA’s and 18.4% are investing in property. The top reasons for investing in property were cited as ‘investing in the future’ at number one and ‘making money’ coming as a close second.
Similarly whilst 60% of 25-34 and 35-44 year olds are investing, 39% and 40% respectively are not investing for their own future – although they’re 20% more likely to be planning than the next generation. Missing this crucial time to maximise returns, capital growth and the power of compound interest, not to mention market rises, could be the difference between a comfortable retirement at 55 and a struggle at 68+.
Topping the charts for lack of investments are those between 45-55, with 50.9% of our responders citing zero current investments. Depending on which end of the spectrum you’re lucky enough to have been born in is critical. According to Which Magazine:
“The common perception is that you’ll need between half and two-thirds of the final salary you had when you were working, after tax, to maintain your lifestyle once you retire”.
It’s a pretty simple calculation then, if at 45 you’re accustomed to an annual household income of 100k and plan to spend 30 years in retirement, you’ll need:
100k x 2/3 x 30 = £1,980,000 (£5,500pcm)
Or for the less lavish of us…
60k x 2/3 x 30 = £1,188,000 (£3,300pcm)
Whether its Champagne and caviar or prosecco and olives, with more and more of us opting to retire early and living longer into retirement, getting the timing right on when and where you invest will be crucial to funding your lifestyle choices.
ISA’s and Funds that provide 1-2% AER are essential to make the most of tax-free allowances but will struggle to provide long-term passive income outside of compound interest so those of you seeking something more substantial will need to find and create alternative monthly incomes.