For some, saving for retirement is not a priority – two people explain why their financial focuses are elsewhere
While millions worry about their financial future, some are taking a radically different approach – by not saving for their retirement at all.
For Melissa Howard-Clark and Charley Brennand, who are both in their 30s, the idea of a pension feels outdated.
They are not alone as almost one in five British adults have no pension savings at all and will have to rely on the state pension, recent research by wealth manager St James’s Place found.
Currently, the state pension is worth £11,976 a year – or £230.25 a week – but a single person needs an income of £31,300 each year for a “moderate” standard of living in retirement, according to the Pensions and Lifetime Savings Association (Plsa).
This includes a weekly shop costing about £55; a two-week, three-star all-inclusive holiday in the Mediterranean; and £30 for each birthday and Christmas present.
But Melissa and Charley say they have no regrets. Here, the pair explain why they have stopped saving into a pension and why they would not look back.
‘I’ve looked at property as a longer term asset’
Melissa previously contributed to a pension, but she has not added to that pot in the eight years she has been self-employed.
She does not not know how much is saved in her existing retirement fund.
The 36-year-old, from the Wirral, said she does not like the idea of locking money away for decades when she does not know what the return will be or “if the rules will even be the same by the time I get there”.
Speaking to The i Paper, she said: “I’d rather invest in things I understand and can steer, like my business, which has grown steadily and given me more flexibility.
“I’ve also started looking at property as a longer-term asset, as well as dipping into stocks in a small way.
“The traditional approach does not offer enough value to outweigh the lack of access or adaptability.”
She is not actively saving for retirement at the moment, and she said she cannot see that changing any time soon.
Melissa runs a creative content studio and consultancy, called Capturing Curves, which is her priority at the moment.
She added: “To be honest, I had not really thought much about how I feel about retirement until this interview, but revisiting it now, I would say I feel positive.
“I am building something that has long-term value and the potential to generate income or be sold in future [her business].
“I do not picture a ‘hard stop’ to work anyway, I see it as evolving into something slower, more flexible.”
At first, it was the financial pressure that came from launching your own business which encouraged her to step away from pension saving. But now she said it is a conscious decision she is making and sticking with.
She explained: “I went from being employed to self-employed and then into running a business.
“Back then I was 28, and I’d already been paying into a pension since I was 17, so I thought a pause would not hurt too much.
“But over time, and after a series of informal chats with other business owners and people in different industries, it became more of an intentional decision.
“I have always lived by the idea that life is for living now. I’ve got a young family, and I would rather put money into making memories, travel and experiences.
“I also have an autoimmune condition, so part of me wonders how much I will realistically be able to enjoy retirement when I get there, which could easily be past 70 with the way things are going.”
Melissa said she “does not do regrets”, just lessons, and if this turns out to be one, she will “learn the hard way”.
‘I want to enjoy the now – it’s a future me problem’
Similarly, Charley, 34, does not pay into a pension any more.
She said she has had a few jobs in her twenties and accumulated a few small pension pots, which caused a lot of stress because she did not know what to do with them – whether to consolidate them or not as she believed it could be a lot of admin.
She is also unsure how much she has in the pots combined.
So, she decided to do nothing with them, saying: “I switched jobs a lot, so I have a few pensions with minimal amounts in them.
“There is very little financial education about the benefits or necessity of pensions and when the standard of life is declining so rapidly for many 20 to 30-something aged professionals. We are focused on paying our bills and keeping out of debt and maybe buying a house, not saving for a pension that seems so in the distant future.”
It’s a “future me problem”, she said. But when faced with the challenge of today versus the challenge in 30 to 40 years, Charley, who is a self-employed marketer from Salford, said she would choose to tackle the challenge of today.
She added: “I have savings, but again, I’m reluctant to invest them for several reasons, namely the lack of education of how to do so, lack of confidence in investing, lack of people to speak to about it and the changing rules on what gets taxed.”
As a self-employed person, she feels there is not enough advice out there on how to create a pension if you are not in regular employment.
This is one of the main barriers for her, she said, adding: “My accountant briefly mentioned a stocks and shares ISA, but I did not feel like I could get any reliable info anywhere to help me feel comfortable making this decision, so I just avoided it altogether.”
Charley does not think this is something she will change her mind about but said she is keen to move into financial investment to build up some sort of a nest egg.
For those looking to save into a pension but are unsure where to start, a financial adviser can help. There are also many online services that can help, including Pension Wise and Citizens Advice.
