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Brits keep money worries under their hats

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04/12/2017
Britain is a nation of silent money worriers, with seven out of 10 people keeping their financial anxieties under wraps.

The biggest money worries for all age groups are around retirement, according to the first Money Talks Study by Seven Investment Management (7IM). More than a quarter (28%) are very worried about running out of money in retirement, followed by paying for care in later life (27%).

Some 22% are worried about having enough money for a rainy day, and 22% about just getting by.

Of the three in 10 who are willing to speak out, they will usually talk to a spouse or partner (81%), but it can often end in rows, particularly among younger couples. Some 44% of millennials (18-to-36-year-olds) in a relationship said they argue about money compared with only 30% of Generation X (37-to-51-year-olds) and 18% of baby boomers (52-to-71-year-olds).

Justin Urquhart Stewart, 7IM’s co-founder and head of corporate development, said: “Retirement is the elephant in the living room that millions of Britons quietly tiptoe around each day. They worry about how they’re going to pay for it, but they don’t talk about it and don’t realise what they need to do so end up doing too little or nothing. We need to start discussing this more openly as a society.

“It’s interesting that millennials, who have many years of working life ahead of them, are almost as worried as their parents’ generation about funding retirement. It’s impressive that despite housing costs being so great and the burden of university fees that many face, they are saving nearly as hard for retirement as generation X. But on the whole, most people are still saving nothing like as much as they need to, and one in three are saving nothing at all.”

Generation X in particular are ‘very worried’ about running out of money in retirement (36% compared to 29% of millennials and 25% of baby boomers). Millennials are more worried about this issue than financial/ credit card debts (13%), and even paying rent/mortgage (19%).

Among those saving for retirement, the average monthly contribution for millennials is £49 and for Generation X is £59.70. Across all generations around one in three are saving nothing towards retirement. Millennials are saving more in general – £91.70 a month on average compared with an average of £49 for Generation X.

Savers continue to underestimate how much they will need to generate a comfortable retirement. Asked how big a pension pot they would need to generate £10,000 a year retirement income on top of the state pension, the average guess was £100,000. Men came closest, guessing £150,000, while women guessed £75,000 and millennials guessed £60,000.

Matthew Yeates, quantitative investment manager, 7IM, said: “The fact that people are woefully inaccurate at predicting how much it costs to generate an income in retirement is a problem. It shapes our savings habits but also how we view the benefits we all receive from the state pension. The state pension is bemoaned by many as inadequate to live upon (and for very many it is), but the value of the state pension is currently estimated at around £200,000. That’s a big number and would shock many based on this survey, perhaps the shock they need to realise the kind of savings necessary to supplement it in any meaningful way. Bottom line, people need to be saving more and earlier.”

How can I stop worrying about money?

Vangile Makwakwa, author of the Heart, mind & money: using emotional intelligence for financial success, said the most effective way to stop worrying is to master the fear. She offers the following five pieces of advice:

1. Become comfortable with uncertainty: uncertainty is part of life and there’s absolutely no way to know the future with complete certainty. There are too many variables.

Sit with your worry and ask yourself these questions: what next step becomes possible in the situation when you release your worry and is it really money that you need in that situation?

Often you’ll find that what you need is clarity of mind, an action plan and courage to execute it. When we see our worst fears and face them, they can no longer control us.

2. Question the validity of your worries: we have a stone-age mind, that’s used to dealing with life and death issues, so when you worry your mind really believes the problem you’re facing is life or death.

The best way to stop worrying about money is to make the mind see this is a false conclusion. Write down the worst case scenario on paper and then write down that if this scenario does happen, you will die. Now question if this is true.

3. Design a financial plan and stick to it: the best way to overcome uncertainty and stop worrying about money is to have a vision and a plan to make it reality.

Having a plan for your finances lowers anxiety and reduces stress because it gives you a roadmap of what to do next.

4. Spend time with your bank account: it’s human to avoid anything unpleasant. However, facing unpleasant situations, like looking at your bank account every day, teaches your mind to stop running from your fears.

5. Get financial help: we all need a helping hand to get to the next level, so don’t be scared to work with a money coach, financial planner or financial adviser.

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