Aviva’s “Shape My Future” tool helps users see the cost of their desired retirement lifestyle compared to the income they would receive from their current retirement savings, helping drive a savings culture as individuals look to make up the shortfall.
Aviva has developed a tool called “Shape My Future” in order to encourage individuals to save for retirement. It does this by allowing users to compare their expected weekly retirement income with the income they would require to fund their desired retirement lifestyle.
Shape my Future begins by asking the individual a few questions about their current financial situation, such as their age, gender, earnings, current pension pot size, and other income they expect to have in retirement. Using this it generates the individual’s weekly retirement income.
The tool then asks the user what kind of lifestyle they would want in retirement with regards to housing, food, travel, family, and hobbies. For each the user can choose between five options ranking from a low-cost budget option to a lavish and more expensive lifestyle. Totaling these factors generates the individual’s weekly cost for their desired standard of living at retirement. Finally, the tool provides the user with a comparison of their expected income at retirement and their chosen weekly cost of living at retirement.
By using Shape my Future users will have a better perspective of any shortfall in their pension savings and give them an opportunity to save more before reaching state pension age. Self-reliance in retirement funding is particularly important at a time when pressure on the state pension is growing due to the UK’s aging population, in combination with increasing life expectancy.
Technology has a real capacity to provide a solution to encourage retirement saving. The government is also developing an online pension dashboard that will allow individuals to see all of their pensions and savings entitlements in one location. Due in 2019, this will further encourage pension savings by helping individuals to better understand how much they have currently saved.
It is good to see pension providers and the government stepping up to encourage individuals to save. The current issue around pensions is engagement. People have a low understanding of how much they need to be saving for retirement and also what options they have when it comes to taking their pot. This is something that needs to be tackled. Anything that helps to make pensions a more open topic of conversation is where the answer lies.
By Danielle Cripps, General Insurance Analyst