Britain’s over 50′s are finding it increasingly difficult to maintain the level of savings required to fund a healthy pension annuity and therefore a comfortable retirement lifestyle, with many holding back on their retirement plans, according to the recent State of Retirement Report. This annual survey, carried out by LV= (Liverpool Victoria), reveals that nearly 70% of over 50′s yet to retire are more concerned about their retirement plans than a year ago.
Alongside the increased number of people in the UK experiencing retirement income concerns (called ERICs), just about 7% of the 1,500 over 50′s surveyed have been able to increase their level of long-term savings. And, the ongoing financial pressure of the current recession has forced around 20% of over 50′s who have yet to retire to cut the amount they are setting aside for their retirement and their eventual annuity purchase by an average of £137 per month.
The economic downturn we are currently witnessing has already significantly ruined some older worker’s retirement plans. Around two million individuals claim to have put back their retirement date due to this current recession, while about 25% say they have no idea when they will be able to actually give up their job. On top of all this, around 70% of ERICs’ primary concern is the increasing cost of food and utility bills, with over 60% of them worried about how little their savings might grow due to lower interest rates and 50% of them anxious about the reduced level of income their retirement savings will buy them. Never mind what annuity rates might be available when they eventually check out annuity quotes.
The report also reveals less than 33% of over 50′s have a reasonably clear idea of the value of their pension fund, with only 25% claiming to know how much their retirement savings are actually worth. A quarter those over 50′s in the survey expect to rely solely on their basic state pension in retirement and this rises to a third when it comes to women. And, despite widespread concerns existing about financial security in retirement, just about 20% of over 50′s have used an independent financial adviser (IFA) for retirement planning support and advice, but this climbs to around 25% for those within five years of their statutory retirement age.
More than half of the over 50′s surveyed have taken no financial advice whatsoever, with a similar number saying they actually trust their own judgement to make the best of their own financial situation. Of those taking financial advice from IFAs, 40% of over 50′s asked about ISAs, around 33% about low risk investment, a healthy 22% for pension drawdown and about 22% for other pension and annuity planning.
Interestingly, already one in ten of the UK’s over 65′s are still not fully retired, and this figure could rise quickly unless those nearing retirement age take steps to increase their pension savings, states Mike Rogers, who is the group chief executive at LV=. While he understands that many people are focusing on their everyday costs and helping to support their families in this recession, he is still concerned that about 20% have cut their savings towards retirement. He suggests that it is vital older workers who question when they will be able to retire, really do review their options, as there are now many more contracts available providing both investment and income generating options than there used to be for people approaching retirement, but too few people are taking advice. As a direct result, millions may miss the opportunity to secure themselves a comfortable retirement.
