It’s Not Just a US Problem

Like many bloggers in the FIRE community i’m based in the US, so sometimes it’s natural to feel that the issues around lack of saving for retirement and having enough money for a comfortable future are exclusive to the US.

As a British citizen by birth I also keep a close eye on the UK situation too. Although in the US we often think of Europe as having a larger safety net fueled by higher taxes the UK doesn’t really fall into this space. Typically people get the state pension (equivalent to US social security) in their mid sixties. For younger people currently they would be scheduled to get it at 68 as the government is changing the age of receipt due to changes in life expectancy and fallout from the global economic meltdown of 2008.

This basic state pension assuming you have enough work credits is 160 pounds per week (around $200US). Clearly this is not enough for most people to live on comfortably.

A new study came out yesterday from a UK think tank called Royal Society of Arts (RSA). This report split the UK workforce into seven groups or “classes” of roughly equal size based around experience and economic security.

  • The Chronically Precarious – 15% of workforce
    • Steady job often low skilled (such as sales assistant)
    • 60% have less than 1000 pounds in savings.
  • The Acutely Precarious – 16% of workforce
    • Often working in gig economy or zero hours unpredictable contracts.
    • Often young people
    • 69% have less than 1000 pounds in savings
  • The Flexiworkers – 12% of workforce
    • Unpredictable but happy workforce (e.g. freelancers)
    • 64% have more than 5000 pounds in savings
  • The Steady Staters – 14% of workforce
    • Middle income population with standard working contracts
    • 54% have less than 1000 pounds in savings
  • The Idealists – 13% of workforce
    • Middle income often entry level young professionals
    • 59% have more than 1000 pounds in savings
  • The Strivers – 16% of workforce
    • Middle income middle level professionals, older than previous group.
    • 50% have more than 10000 pounds in savings, 26% have more than 30000 pounds in savings
  • The High Flyers – 14% of workforce
    • The most affluent and skilled part of the workforce
    • 55% have more than 10000 pounds in savings, 32% have more than 30000 pounds in savings

Overall, a third of the UK population had less than 500 pounds in savings and 40% less than 1000 pounds.

Three of these groups look like they would struggle with a large emergency such as a housing repair or car failure. One thing to remember though is that healthcare is paid for out of taxes so there is no need to save for that type of emergency, unless they choose to go private.

Even among the top group, there are not large numbers of people with tens of thousands of pounds or in a position to retire early.

I don’t think the numbers in the US would be much different. but it’s indicative that globally there is an issue with people not having enough to retire.

Clearly a sea change is needed in how people plan for their retirement and think about their future.

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Steve TraylenFrankie Recent comment authors
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Definitely not just a US problem! I don’t have the stats for here in Australia but no question its pretty similar. The one saving grace for younger people here is the mandatory superannuation system, which basically forces you to start putting funds away for your retirement as soon as you start working.