Those who set tangible goals for the future could be £30,000 better off in retirement, according to new research.
The Set the Right Goals study from Zurich UK found that those that set specific goals for when they are aged 65 or over are more likely to save, and put aside approximately 7% of their salary into their pension, compared to 5% for those without.
Goal-setting and saving
The findings uncovered a definitive link between goal-setting and saving when it comes to pensions. Those of working age with a workplace or private pension who set goals for life when they are aged 65 or over – such as travelling, taking up new hobbies or being in a position to financially support children and grandchildren – save 7.25% of their salary into their pension, while those who don’t know what their aspirations are for the same period save just 5.36%.
Difference in pension pots
Given that an employee with 5–9 years’ experience typically earns £30,708, a ‘goalless’ saver earning at this level would put away just £1,646 per year into their pension, compared with £2,226 per year for those with set goals. This does not include any contributions from employers, who can sometimes match the employee’s pension contribution, meaning that the difference in pension pots could be far greater.
Most emotionally motivated
The results found that certain goals have a greater impact on savings behaviour than others. Where people have an emotional attachment to a goal (for example, saving to support elderly relatives, have children or go on holiday), they are more likely to take positive saving action to achieve them. Saving towards retirement was identified as respondents’ most important saving goal, as well as one of the most emotionally motivated.
Realise your ambitions
For most of us, managing our money day to day occupies most of our attention particularly when rising inflation puts family budgets under ever greater strain. But this research demonstrates that thinking about what you aspire to and having goals for the immediate and long term will inspire people not only to save, but save more. This is why it is so critical to take time out, and visualise your future so that you can then take action to financially prepare and realise your ambitions.
Will you make your goals achievable?
Small steps taken early on can make a huge difference. Saving regularly into your pension or drip-feeding amounts of money into the right investments can generate an income that will make your goals achievable.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,073 adults. Fieldwork was undertaken between 25 and 26 October 2016. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).