Some 3.2 million UK Gen Xers’ retirement savings have been disrupted by the coronavirus pandemic, a new report has found.
COVID-19 has left 1.6 million 40- to 55-year-olds on furlough, around 1.3 million with reduced hours and just over half a million have lost their jobs entirely, according to the research by the International Longevity Centre UK (ILC), supported by Phoenix Group.
At least 1 in 3, or nearly 4.3 million Gen Xers, are faced with navigating retirement with minimal retirement incomes, with just over 2.3 million expecting to rely predominantly on the state pension — standing at just over £9,000 a year — when they retire.
Half of Gen X who are still to retire — equating to 6.5 million Brits — are concerned they won’t be able to afford the retirement lifestyle they would like and 6.2 million (48%) think they’ll be worse off than their parents in retirement.
COVID-19 is making it harder for this generation to save, with 12% spending part of their savings and 13% saying they are saving less due to the pandemic.
Of those aged between 40 and 55, 61% said they can’t afford to save more or are prioritising paying off debt, and 29% say they have too many other pressures and priorities to think about. Insecure incomes and outgoings are barriers to saving for 19% of Gen Xers, while a lack of motivation prevents 13% from putting money away for retirement.
“This is the generation that entered the job market too late to benefit from final salary pensions, yet too early to benefit from schemes such as auto-enrolment. The combination means that without appropriate intervention many Gen Xers are expected to face very significant challenges in retirement, and even pensioner poverty,” said Jenny Holt, managing director customer savings & investments, Phoenix Group.
The ILC is calling on the government, industry and employers to “urgently work together to support this generation and avert millions from struggling in retirement in the decades to come.”
ILC director David Sinclair said: “From a retirement income perspective, many Gen Xers are, frankly, screwed. Too many are sleepwalking into a retirement where they won’t have an adequate income to meet their aspirations.
“And their situation has been made worse by COVID-19.
“They haven’t been able to save enough. Many Gen Xers aren’t going to benefit from final salary pensions. And there is a sense of hopelessness about how they might turn things around.
“There is some good news however. Some people really do want to save more. They just don’t see how they can do it. Government and industry must find a way to lever this willingness and ensure public policy better addresses the barriers too many are facing to saving.”
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