SNAPSHOT2 min read

How much should I be saving for retirement?

Investors globally are saving actively toward their retirement, but how much is enough?



David Brett
Multi-media Editor
This block is deleted,Remove this placeholderThis block is deleted,Remove this placeholderThis block is deleted,Remove this placeholderThis block is deleted,Remove this placeholderThis block is deleted,Remove this placeholderThis block is deleted,Remove this placeholderThis block is deleted,Remove this placeholderThis block is deleted,Remove this placeholder

Shift in responsibility for retirement savings

The rise in retirement savings could perhaps be attributed to the growing realisation that people can no longer rely on government provision in the form of state pensions to help significantly fund retirement.

More than half of investors (55%) agreed that the state provision for retirement is not enough to live off, according to GIS 2020.

It may also be that some countries have actively adopted policies to shift the responsibility for funding retirement from the state to individuals.

For instance, the UK has introduced initiatives such as auto enrolment. That means an employee is automatically enrolled into their company’s pension scheme. At the same time, the UK is increasing the ages at which people can qualify for state pensions.

However, the constant changing of the rules has undermined investors’ confidence, so much so that some don’t even see the point in trying to save specifically for retirement at all. 

Could undecided savers face a retirement shortfall?

Avoiding saving for retirement is not the answer. It creates bigger problems further down the line. But there is also potentially an issue for those that are uncertain as to whether they are saving enough.

GIS 2020 found that where there was an element of uncertainty, people tend to save less – not more. Those investors who describe themselves as undecided as to whether they are saving enough for retirement are only saving 13.9% of their income. That is less than the recommended 15% and much less than those investors who thought they were saving enough (16.8%).

Rupert Rucker, Head of Income Solutions, said: “It is simply disastrous not to think about saving for retirement. Previous generations benefitted from generous final salary pensions and more certainty over state provision, but that is no longer the case.

“Though it may not feel like it, even if you can only put a small amount away it can still make a big difference.

“The earlier you start saving the more you can benefit from the miracle of compounding. The concept simply involves earning a return not only on your original savings but also on the accumulated interest that you have earned on your past investment of your savings.

”If your money is invested it means it is doing a lot of the work for you. An earlier start makes it less likely that you will have to save a larger percentage of your income later in life.”

Retirement savings more of a priority

Perhaps one of the most difficult aspects of saving for retirement is making it a priority, and picturing your ‘future self’. How will the future you want to spend your time? How much money will you want to spend? And where will you want to live?

And if these answers aren’t immediately clear, it’s easy to fall at the first hurdle and simply never think about retirement savings until you really have to - by which time it may be too late. Historically this has been true, with many people failing to make later life a priority.  

However, the GIS  2020 shows that this attitude is changing. 

It revealed that pension investing is a joint top priority when it comes to investors use of disposable income (see table, below). This is a far cry from just three years ago when only 10% of people considered investing in their pension first.  

Investors also recognise that in an era of low interest rates they need their money to earn a return higher than they are likely to get from cash.

A quarter of people (25%) invest another type of investment (e.g. equities, bonds and commodities), compared with 17% depositing money in a savings account.

Interestingly, spending on luxuries and property investments have dropped down in respondents priorities. This could be linked to a greater sense of caution as the impact of the coronavirus continues to unfold.

This block is deleted,Remove this placeholderThis block is deleted,Remove this placeholder


David Brett
Multi-media Editor


Follow us.

Please ensure you read our legal important information before visiting the rest of our website.

Issued by Schroder Investment Management (Singapore) Ltd, 138 Market Street, #23-01, CapitaGreen, Singapore 048946

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security / sector / country.

Schroder Investment Management (Singapore) Ltd is regulated by the Monetary Authority of Singapore. Reg. no. 199201080H

Important notice: Schroders does not make unsolicited requests through emails, calls, messages, WhatsApp, WeChat, Facebook, Instagram applications. Any contact other than via Schroders’ official channels for personal or financial information is likely to be false and fraudulent. Please stay vigilant and refer to our Fraud Alert Notice for further details. If you have doubts about the person, platforms, websites or institutions that claim to be associated with Schroders, please contact us via +65 6800 7000 and inform the local police.