New research has shown that 27% of over 50s, equivalent to around three million people, leave it until two years prior to retirement before doing any retirement-related financial planning.
The Money and Pensions Service surveyed 2,000 UK adults aged 50 to 70, who all had some form of pension savings. The Service notes that 2020 will see 940,000 people reach the age of 55 – the minimum age for accessing pension funds – and that this number is the highest in almost 20 years.
In addition to the 27% who will only make plans in the final two years, another 10% say they won’t carry out any financial planning at all ahead of retirement. Only 7% of respondents described themselves as being “fully prepared” for retirement.
The survey respondents who had retired recently also made a series of recommendations to Generation Z, who will be the next generation to retire. These include:
- Save more towards retirement (mentioned by 60% of recently retired respondents)
- Start planning retirement finances earlier (56%)
- Take time to decide how you will access your retirement savings (45%)
- Find out more about how to make the most of your pension monies (44%)
- Seek guidance or advice (41%)
18% of all respondents say that Covid-19 has caused them to delay accessing their pension, but 14% say that the pandemic has resulted in them deciding to make withdrawals from their pot earlier than planned. Of this 14%, 71% said that they needed the funds to support their day-to-day finances, and the remainder said they were supporting family and friends.
MAPS recommendations to pension savers include:
- Making sure that they don’t lose track of their various pension pots
- Thinking about what their living costs are likely to be in retirement
- Considering whether they also need to provide for a spouse or other family members, as well as themselves
Carolyn Jones, Head of Pensions Policy and Strategy at MAPS said:
“Given over a third of over-50s have had their finances affected by Covid-19 and we’re now facing a recession, we’re urging people not to delay or skip planning their retirement finances – whether you’re thinking of retiring later or bringing it forward. Your pension is likely to be one of the most valuable assets you hold so it’s really important to start planning early to make sure you make the best choices based on your circumstances. Getting help and talking through your options now could be the difference between having a comfortable retirement or having to work for longer or adjust to living on a lower income.”
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article