Surprising research from LV= indicates that 45-54 year olds spent around two hours more planning for their last holiday than thinking about their retirement.
Those approaching the minimum retirement age of 55 are spending worryingly little time thinking about their retirement options. As a result they have a poor understanding of their financial situation and often fall short of what they want to live off.
The research showed that many people actually have £240,000 less saved in their pension pots than they will need to live on.
People expect to need around £1,360 a month to live comfortably in retirement and in order to guarantee this someone retiring at 55 would need to have around £311,000 saved, assuming that they qualify for the full state pension.
However, the average pension savings of those surveyed aged 45-54 years old is only £71,342, which means that they will receive far less during retirememt than they will need.
Given the large shortfall in pension savings, consumers must recognise that advice is the best way to ensure that their income will last throughout retirement.
Advisers taking a safety-first approach to retirement planning can firstly guarantee the security of essential income before enabling clients to enjoy the flexibility of the pension freedoms.
John Perks, Managing Director of Retirement Solutions at LV=, emphasises the importance of forward planning by saying that “Ten years away from retiring is really the last opportunity people have to make any significant changes to their savings that could mean a more comfortable retirement.”
“Taking financial advice is the best way to ensure consumers make the right financial decisions and secure a better retirement income.
There are a number of tools available to help consumers and pension advisors with retirement planning. For example, LV=’s Retirement Pathfinder tool provides advisers with a snapshot of their client’s retirement future along with clear scenario comparisons of various solutions.
Many over 50’s regret retiring too early
It is not just the financial implications of retiring that must be taken into account. According to a SunLife survey 85% of the over 50’s feel they retired too early.
On average, those that are retired or semi-retired think they did so two and a half years too early. Those aged 70+ think they retired three years too early. Less than 10% think they retired too late and just 5% they got the timing right.
“Our research shows that people aged 50 and over feel 10 years younger mentally and almost four years younger physically, so, far from being ‘over the hill’, people in their 50s, 60s and 70s are feeling fit, healthy and sharp, which could explain why so many feel they gave up work too early and why so many are starting new careers.”, said Ian Atkinson, marketing director at SunLife.
He went on to say that “Many people in their 50s, 60s and 70s have made big changes in their work lives, by either dropping to part time, or giving up stressful careers to do something they are more passionate about. Far from being the end of working life, for many, turning 50 actually offers a brand new start.”