Money’s too tight to mention

Looking to retire from work, not a paycheck?

When it comes to retirement insecurity, one concern dominates all others – the fear of running out of money during retirement. And with people living longer than ever before, it’s a very valid concern.

A new report reveals how two-thirds (66%) of adults planning to retire this year risk running out of money[1].

The research found that a 2021 retiree plans to spend, on average, £21,000 a year in retirement – almost £10,000 less than the average UK household income (£29,900)[2].

Just two in five (39%) feel very confident that they’re financially ready to finish working this year, with a third (34%) of women feeling very confident versus two in five (43%) men.

Longer-term financial priorities and plans

Almost half (48%) of those surveyed are planning to reduce their usual spending to support themselves in retirement, while a quarter (27%) will work part-time to help financially. One in five (21%) are planning to sell their home or downsize to fund retirement.

Deciding how and when to retire is one of the biggest life decisions and transitions we make. Longer life expectancy, volatile investment markets and ever-changing regulation can make planning and preparing for retirement feel confusing, not to mention the impact of the coronavirus pandemic on people’s immediate and longer-term financial priorities and plans.

Apprehensions about retiring during a pandemic

Whatever the plan, when it comes to making the decision to retire, most people find it understandably daunting. Even more so if you don’t feel prepared. There are clearly more apprehensions about retiring during a pandemic amongst this year’s retirees. Pensions are without a doubt the most popular option for funding retirement, but it’s important retirees also consider any other savings or assets they can use when deciding whether they can afford to retire or not.

Understanding what money you have for your retirement and how to spend it wisely can be difficult, but that’s where preparation and obtaining professional financial advice can help. Circumstances or priorities may change,  particularly if you’re retiring amidst a global pandemic, but it will be much easier to adapt a plan you already have rather than start from scratch.

Helping you plan to enjoy the future you want

Longer lives, less proactive saving, higher costs of living and a lack of a financial planning are all contributing factors to the risk that many
people may outlive their money in retirement. If you would like to talk to us about your future retirement plan, we can help make sure it’s a resilient one. To find out more, please contact us.

Source data: [1] Consumer research of 2,000 UK adults who were either due to retire in the next 12 months, or had retired in the past 12 months. Research was carried out by Censuswide in February 2021. [2] ONS average household income, UK: financial year 2020

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options at retirement.

Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.