Funding the Life Ahead
At Canada Life UK, we’re building stronger, more secure and inclusive futures for our retirement, investment and protection customers.
We hope to play an active role in supporting families throughout their working years and into retirement, helping them make the most of life. We want people to feel more in control, optimistic and prepared to embrace the positives the additional years may offer.
Welcome to Life100+.
Since goals, plans and a sense of control are key to optimism and satisfaction, a principal aim of Life100+ is to help people plan for their future with confidence. Our research reveals that many of us are focused on the here and now, and not planning sufficiently for longer lives. This section considers the role of financial preparedness in securing happier longer lives.
Of those not retired, four in ten (41%) are unsure about how much they will need for an additional £20,000 retirement income, combined with their state pension and consequently longer lives. A third (33%) wrongly believe they will need less than £200,000.
Realistically, and depending on key variables like health, age, marital status and sex, a pension pot of £300,000 or more will be needed to generate an annual income of £20,000. As such, supporting people to better understand the link between the size of their pension pot and the income it could provide, along with saving more at earlier stages, is going to be key.
However, people may not yet have a clear understanding of how the demographic shift will challenge the traditional three-phase model of education, work and retirement.
On the one hand, 69% of our respondents agree with the statement ‘Retiring in your sixties will become a thing of the past’ (c.20% neither agreed nor disagreed, while c.10% disagreed).
On the other, less than half (48%) agree that living longer means that we should work for longer – and indeed a quarter disagree. Disagreement levels are highest amongst 18- to 34-year-olds.
This apparent contradiction strongly suggests that more needs to be done to understand the effects increased longevity will have on the way we structure our working lives. And if we don’t work longer, we’ll undoubtedly need to save more.
People do accept they must save more if longer lives are going to become the norm. Our data indicates a strong correlation between age and level of savings.
More than two-fifths of under 35s (45%) and those aged 35 to 54 (43%) have less than £10,000 in savings or no savings at all. In comparison, this proportion decreases to a third (32%) among those aged 55 to 64, and to less than a fifth among those aged 65 to 74 (19%) and those aged 75 and over (18%).
Of course, these age groups have had more time to save, reached and gone beyond their income peak,13 are more likely to have paid off their mortgage, inherited wealth or started to draw down on their retirement income.
However, the data shows that significant proportions of younger generations are saving. We believe this to be a good sign because saving, alongside other factors, has a positive relationship with life satisfaction: life satisfaction increases as savings levels grow. This suggests that the act of saving, including actively putting money aside outside of our pension pot, can increase life positivity.
The role of property assets in life satisfaction
Saving is of course one way to accumulate assets that are potentially valuable later in life. Home ownership is another. Home ownership also correlates with life satisfaction and homeowners are more satisfied than those with other forms of living arrangements.
Supporting younger family members to get on the housing ladder is a way for parents and grandparents to help the younger generation and promote their financial well-being.
According to the ONS ‘Milestones: journeying through modern life’, between April 2022 and April 2023, 36% of first-time buyers used gifts from family or friends to fund their deposit and 9% used inheritance. This is far more than those who received help 10 years before. In 2003 to 2004, 20% of first-time buyers used gifts from family and friends and 3% used inheritance.
Discover more insights in our full Life 100+ Report. This can be accessed via our website, here.
