Monday 4 December 2017 2:43 pmSchroders Talk

UK investors save 11.3 per cent of salary for retirement - is it enough?

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UK investors currently save an average of 11.3 per cent of their income specifically for retirement, according to a major new study.

The Schroders Global Investor Study (GIS) 2017 found that non-retired UK investors are saving a higher proportion of their income for retirement than the European average (9.9 per cent), and roughly the same as the global average (11.4 per cent).

The study, which surveyed 22,100 people who invest across 30 countries, also found that many UK investors (73 per cent) feel that their retirement income will be, or is, sufficient.

To afford to live comfortably in retirement the average investor thought they will need to save 12.4 per cent of their income – more than their stated current actual saving rate.

Nearly half (42 per cent) of retired UK investors surveyed said they wished they had saved more for their retirement.

Lesley-Ann Morgan, Head of Retirement at Schroders, said: “It’s well known that people aren’t saving enough for retirement but this study shows that even those who are already established investors are not putting away enough money.

“There’s also a strong message from some of those who have already saved: ‘I wish I had saved more’.

“The pension savings gap is further compounded by the fact we’re in an age of low rates and low returns. To reach their goals, people will need to save even more than savers did in previous generations.

“The study shows non-retired UK investors are only putting away 11.3 per cent of their income but say they want to retire at age 60. Our analysis shows that someone who started saving for retirement at age 30 is likely to need savings of 15 per cent of their income, and or above a year if they wanted to retire on a minimum of 50 per cent of their salary.”

Are UK investors saving enough?

The level of retirement income that savers can expect depends on:

  • The amount contributed (and when).
  • The returns achieved.
  • How the money is invested after retirement.
  • The length of time over which money will be withdrawn.

The chart below sets out analysis undertaken by Schroders. It assumes a starting age of 30 with a £35,000 salary that rises in line with inflation. It shows the real annual returns – where inflation is taken account – that would be needed to achieve two levels of income: 50 per cent or 66 per cent of your salary when you retire. These are typical bands that people aim for. It also assumes they will draw on the money for 18 years, on average.

How much savers need to save, depending on returns achieved

Source: Schroders Retirement. For illustrations only. Starting age 30 years, retiring at 65. Starting salary of £35,000 assumed to grow at the rate of inflation. Replacement rate based on current annuity rates generating an income of 66 per cent and 50 per cent of final salary respectively.

So if a saver contributed 15 per cent of their income, they would require an average annual real return of 4.3 per cent (the middle column) to achieve a retirement income worth 50 per cent of their income. If they contributed 10 per cent of income, however, they would need a return of 6.9 per cent, a level higher than the long-run return on equity markets.

Past performance offers no guarantee of future returns but today’s low-rate world could mean investments pay less than they have done in recent decades.

However, the Schroders Global Investor Study also found investors remained optimistic on the outlook for returns. In the UK, investors anticipated their investments would return 8.7 per cent a year on average, over the next five years.

The Schroders Economics Group has forecast a 5.4 per cent annual return for UK equities over the next seven years, or 2.4 per cent a year after inflation is taken into account.

How will retirement be funded?

UK investors would like to retire, on average, at 59.7 years old, according to the Schroders Global Investor Study. Once retired, the state pension will/has help fund their retirement but to a much lesser extent than other countries.

On average, less than a fifth (16 per cent) of their retirement income will/has come from the state pension, compared with over a quarter (26 per cent) in Europe and just under a fifth (19 per cent) globally.

In the UK, a high proportion of retirement income is expected to come from company pensions (30 per cent) and other savings (17 per cent).

The Schroders Global Investor Study, which surveyed people planning to invest at least €10,000 (or the local currency equivalent) in the next 12 months and who have made changes to their investments within the last 10 years, covers a whole range of investor attitudes and expectations which can be found at

It sits alongside Schroders InvestIQ, a new test that aims to improve the abilities of investors.

What is the investIQ test?

Do you make decisions based on logic and reason? The truth is our mind plays tricks on us more often than we realise. It makes us believe we’re thinking analytically, when we may be acting instinctively. So what feels like an informed decision, is actually clouded by behavioural biases.

The same thing happens when we’re making important choices – like how to invest our money.

At the heart of investIQ is a short test developed by behavioural scientists that helps you understand your investment personality. In less than 8 minutes, you’ll get a detailed report outlining which behavioural traits influence you the most, and how best to deal with them.

Take the investIQ test in less than eight minutes. Go to

Schroders commissioned Research Plus Ltd to conduct, between 1 and 30 June 2017, an independent online study of 22,100 investors in 30 countries around the world, including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, UAE, the UK and the US. This research defines “investors” as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last 10 years.


Important Information:

The views and opinions contained herein are those of David Brett, Investment Writer, and others named in the article, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The sectors and securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. The opinions in this document include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA. Registration No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.