Wide Disparities in Baby Boomers' Savings for Retirement

Latest analysis from the Office for National Statistics shows that contrary to much journalistic and political shorthand, not all Baby Boomers have amassed sizeable savings for their retirement.  In fact the bottom 50 per cent of all households headed by someone aged 50-64 account for only six per cent of the overall total net savings of households in this group.

The figures come from a newly published, updated chapter in the ONS’s Pension Trends which further analyses data from the Wealth and Assets Survey which took place in 2006/08.  The chapter brings together data on all forms of savings – in private and occupational pensions, financial assets and property – excluding the state pension and the value of people’s main residence.

Some of the other main findings from this data covering 2006/08:

  • The estimated aggregate savings of households headed by 50-64 year olds in Great Britain was £2.2 trillion and nearly three quarters (73 per cent) was contributed by pension saving.
  • 40 per cent of households headed by a 50-64 year old had Defined Benefit (final salary) pension savings and 44 per cent had Defined Contribution pension scheme.  Some households had both.  But whereas median DB pension saving for those households with such savings was £161,200, the equivalent for households with DC pension savings was just £22,000.
  • The median value of net financial savings for households in the 50-64 age group was £15,900, with the most common assets being current accounts, savings accounts and ISAs.
  • 13 per cent of households in the 50-64 group had property other than the main home.  The median value of such net property savings for theses households was £130,000.
  • Nearly a third (31 per cent) of households in the 50-64 age group were in receipt of a pension and just over half of theses also had pensions still accumulating.

One of the most sobering tables shows that in January 2011, a man aged 65 would have needed to have around £125,000 in retirement savings to buy an annuity giving £5,000 a year.  A woman of 65 would have needed around £135,000. 

To receive an annual income of £25,000, a 65 year old man would have needed just over £629,000 and a 65 year old woman just under £670,000.


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