One in ten UK adults saves retirement cash in a piggy bank
At a time when the pressure to save more for later life is at an all-time high, the research by Aviva found some revealing insights when it comes to where people stash their hard-earned money.
While an employer pension is the most popular vehicle used to save for retirement – the choice of 29% of respondents – this is closely followed by cash ISAs (20%) and standard bank or building society accounts (18%).
Incredibly, 8% actually keep some of their retirement savings as cash, using a piggy bank or similar.
A further 7% are investing in property for their retirement – rising to 11% in the 35-44 age group – and 2% are investing in the likes of art and antiques to secure an income in their later years.
When it comes to saving more generally, bank and building society savings accounts are the most popular places to save, with two thirds of the nation (66%) using them.
Cash ISAs are a preferred option for nearly half of UK adults but a third are shunning potential interest gains by keeping some savings in a piggy bank.
Almost half of the nation’s adults say that they save on a monthly basis, with one in three saying they have a specific purpose in mind for their savings.
Holidays and rainy day funds are the most popular reasons for saving across all age groups, but purposes vary according to life stage.
People aged 18-24 are most likely to be saving for travel plans or a house deposit, while those aged 45-54 are more focused on saving into a pension and building a rainy day fund.
Rodney Prezeau, consumer platform managing director for Aviva said: “It’s fantastic to see that so many people have got into the habit of saving. However, it’s worrying that many who are investing for the long term seem to be putting their cash into vehicles which are generally more suited to shorter term savings.”
According to Aviva, £100 invested 20 years ago in a 90-day notice savings account would be worth £188 today, but would only buy £74 worth of goods in 1995 terms.
In other words, by investing in a deposit account over the last 20 years, someone’s spending power has fallen by more than a quarter.
But if £100 had been invested instead in the FTSE All Share, this would have generated £371 in 2015 which would have spending power of £146 in 1995 money.
Prezeau added: “Cash ISAs certainly have their place, but we’d encourage consumers to look at long term benefits if they are planning to save for many years or even decades, for example if they’re putting money away for retirement or for children’s university fees. A stocks and shares ISA with its tax advantages is one of the ways people can save if they have a long term goal in mind and don’t need instant access to their savings.”