Moneyfarm uncovers the “mid-life opportunity”
- Wealth Management
- 14.01.2020 12:06 pm
Moneyfarm, the leading European digital wealth manager, today launches a campaign urging those entering their 40s and 50s to invest in their plans for later life now, after identifying a “mid-life opportunity” which could see them benefit from thousands of pounds extra income to help them realise their retirement goals.
The research found that, between the ages of 35-55, family pressures are the main barrier preventing those surveyed from saving for retirement (19%). However, when looking at the amounts spent annually supporting family members, the average person spends £8,300 less by the age of 55 than they did at 35.
When this cash is reallocated to a self-invested personal pension (SIPP), those investing can begin to make big strides towards achieving their retirement goals. For instance, those aged 45 looking to retire at 66 could benefit from extra income in retirement of up to £9,831 a year by investing the money saved from family members becoming less financially dependent in Moneyfarm’s P7 portfolio.
In addition, there’s evidence that other opportune moments that help people achieve their retirement goals arise as they enter new life stages.
As children leave home and forge their own paths, one in seven (14%) of those surveyed plan to move into a home more suited to their needs as they near retirement, while 19% said the extra time means they can work a part-time job to help give a boost to their retirement fund.
Considering those aged between 55 and 64 are also the most likely to receive a big windfall of inheritance money, the mid-life opportunities presented to this group to begin realising their retirement goals are substantial.
Meanwhile, it was found that almost half (48%) have no idea what the cost of achieving their retirement goals is. Of those that did know, it was estimated that they would need to save an average of £27,213 to reach these goals. For a 45-year-old looking to retire at 66, this is the equivalent to investing £82.58 extra monthly in Moneyfarm’s P7 portfolio, whereas as a 35 year old could stand to benefit even more, needing to invest just £48.83 extra a month.
Despite the mid-life opportunity to maximise your funds for later life, nearly a third (30%) say they are not saving for retirement at all, with four in 10 (40%) say they do not know where to start when it comes to saving enough to reach their retirement goals.
When looking at what specific goals Brits want to achieve in retirement, travelling the world (34%) topped the list, followed by looking after family (29%), volunteering in the community (17%) and making new friends (15%). Yet, as well as the most popular, travelling was found to be one of the most expensive retirement goals, estimated to cost retirees £22,047 on average. Despite this, going travelling in later life is becoming increasingly common, supported by recent figures showing the number of over 65s travelling abroad rising by 35% over the last 20 years.
Aiming to help those planning for retirement with simple financial know-how to achieve their goals, Moneyfarm has partnered with travel guru and broadcaster Andy Mossack, who is Editor of TripReporter.co.uk, to give an expert view on how to make the nation’s most desired retirement goal a reality.
Andy’s advice for those set on travelling the world in retirement is:
- Choose a method of travel that suits you:
- Famous as the mandatory gap year experience where sleeping on the train saves hotel expenses, interrailing for adults takes on a whole new perspective – and you can do it in style. For instance, unlimited 1st class travel across 31 countries stretching from Portugal’s Atlantic coast to Turkey’s Asian border within one month currently costs just £759.
- Air travel is the most expensive and less environmentally friendly but, if you’re set on air travel, make sure to fly with airlines that can offer highly flexible round the world tickets through their global partnerships. Often these tickets give you considerable savings compared to booking flights separately, allowing you to stop-off for a set number of times depending on how many miles you intend to fly in total.
- Alternatively, if you’re looking at embarking on a cruise, make sure that the all-inclusive offer includes all meals, drinks, excursions and tips. Cruises can be pricey but can turn out to be excellent value in the long-run if you go with a provider that covers in-destination costs
- Take the path least travelled. Travel to destinations and at times where your money will go further:
- The UK has suffered with exchange rates in Europe and the US over the last few years but there are many destinations where sterling remains strong. Destinations such as South Africa, Vietnam, Argentina and parts of eastern Europe such as Romania and Bulgaria for example can make your pound go a lot further. The flights might not be cheap but once you arrive you will quickly notice the difference.
- The beauty of retirement is that you’re not forced to take holidays at certain times of the year. Peak-times are always the most expensive and there are many savings to be found visiting a country off-peak. A good example is the Caribbean which is always seen as just a winter sun destination. The truth is in our summer it may be their rainy season but that normally means a short strong shower in the afternoon, while the temperatures are still perfect. Be travel-wise and you can save considerably.
- Be savvy when you choose your destinations in-country:
- There can be huge variations in price depending on which regions of a country you pick. The south of France is an excellent example. The French Riviera is a wonderful destination and Nice, Cannes and St. Tropez may well be on your bucket list. However, the truth is they are often crowded and pricey. Further west in the Languedoc region you’ll find the same coastline with much better beaches for much lower prices and far less people.
- The same situation for Italy and Amalfi, which is another stunning location but very crowded in summer. Head instead to the Cilento coast which is about a 30 minutes’ drive further, but you’ll see prices fall dramatically as well as the number of tourists. A much better experience all round.
- Invest in your retirement travel goals now
- Travelling the world can be a hugely rewarding experience, and if you make the right financial decisions now, it’ll make this goal a lot easier to achieve.
- Moneyfarm has identified a mid-life opportunity that, if handled with care, can help you make the most out of your retirement. So, whether you’re planning a river cruise down the Ganges or boarding the Orient Express from St Pancras, have the confidence to plan for your retirement and be reassured your goals are attainable.
With travelling the world in retirement estimated to cost £22,047 on average, Moneyfarm has outlined what those aged 35, 45 and 55 would need to invest on monthly basis to make this retirement dream come true. For instance, someone aged 45 aiming to retire at 66 would need to make monthly contributions of £145 in a P7 Moneyfarm Pension to have enough to travel in retirement and live a comfortable lifestyle, £25.67 less a month than if they were to save that money in cash only.
Monthly savings required for a £22,047 trip around the world assuming a retirement age of 66
Months until retirement
Moneyfarm P2 portfolio
Moneyfarm P7 portfolio
Anjali Sarin, Head of UK at Moneyfarm, said:
“Our research shows that, as a nation, we have big hopes for retirement. Despite this, we’re taking little action to ensure our retirement goals are realised. It’s important people have access to the right advice and the right financial products to achieve their goals, and that’s something we at Moneyfarm go above and beyond to provide our clients.
“Investing in a Pension and an ISA is a great way to make sure you’re keeping on top of your retirement funds, allowing you to benefit from tax-free allowances and ensure that you’ve got that little extra to tick things like travelling the world off the bucket list.”
Moneyfarm provides all its clients with personal advice and support so they can feel confident about their investments. Their investment portfolios are tailored to clients’ investment plans and are managed by a team of experienced portfolio managers, using a proven investment strategy.
Moneyfarm’s convenient online platform and mobile app provide complete transparency, making it easy for clients to stay in control of their investments and track their progress towards retirement goals. Their team of investment advisers are always on hand to provide guidance and answer any questions.
Moneyfarm offers Pensions, Stocks and Shares ISAs and General Investment Accounts, aimed at helping investors make better decisions with their money to reach their dream retirement.