A recent YouGov poll of post Covid behaviours found that more than half (54%) of 4,343 people who took part, hope they will make major changes in their own lives after the crisis.
A further survey by investment manager Standard Life Aberdeen provided insights, whatever your intended retirement year, from people who have or plan to retire in 2021 provides interesting insights.
The changing face of retirement
The Class of 2021 report found that 37% of respondents had brought forward their retirement date because of the Covid-19 pandemic, echoing the YouGov research.
The survey revealed that the average age of people planning to retire in 2021 is 60 – six years before current state pension age, which will rise from 66 to 67 between 2026 and 2028. People who retire at age 60 in 2021 will, on average, live for another 25 years if they are men and 28 years if they are women, according to the Office for National Statistics (ONS). A quarter will survive to age 92 and 94 respectively, which would mean over a third of their life is spent in retirement.
The road to retirement is paved with good intentions
This highlights the importance of making sure that your retirement plans are robust and can continue to provide the required level of income throughout retirement.
Despite the pandemic causing many to rethink priorities and work-life balance, prompting career changes and a spike in early retirement, only about two in five felt very confident they were financially ready to finish working this year. The lack of financial confidence also showed up in other responses:
• Nearly half intended to cut their spending to support their retirement.
• Just over a quarter said they would work part-time for the same reason.
• One in five planned to sell their property or downsize to meet their retirement costs.
Many underestimate the income needed in retirement, the average planned retiree’s household spending was £21,000 a year, almost a third less than the average 2020 household income, according to the ONS.
The most concerning statistic was from the survey’s sponsor, the Pensions and Lifetime Savings Association, who calculated that even using the £21,000 annual spending target and allowing for the eventual arrival of the State Pension, two thirds of the 2021 retirees were at risk of running out of money. The association’s estimate was that a savings pot of £390,000 was needed to cover 30 years of retirement expenditure.
How we can help you
Everyone has their own objectives and financial plans. We can help to build a full picture of your investments and then develop a plan to see how you can meet your income needs in retirement. We may recommend that you pay more into your pension plans to bridge any shortfall, delay your retirement or you may be on track to achieve your retirement objectives.
We can provide cashflow modelling which will show how your planned expenditure can be met using all your potential sources of income, so that you have the financial confidence to retire when you want, making effective use of investment options and tax allowances.
Whether you are planning for retirement, approaching retirement or in retirement, our advisers can help you to look ahead with confidence and make sure your intentions can be supported with robust retirement plans. If you would like to have a retirement review, to check if you are on track for the retirement you want, our advisers will be glad to help you.
The value of your investment and the income from it can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.