- 48% fear insufficient retirement funds
- Women more concerned than men
- Majority lack adequate pension savings
A report claims that as many as 48% of individuals are concerned that their pension savings will not be sufficient to support them in retirement.
Moreover, 56% of respondents said they had yet to save enough money for retirement, according to Investec Wealth & Investment research.
The proportion of women who expressed concern was more significant than that of men: 61% of women reported doubts, compared to 53% of men.
Although elderly adults were the least likely to be concerned, one-third of those aged 65 and older are concerned that they may run out of money in retirement.
43% of those over the age of 65 responded that they were not concerned about having a final salary pension.
Participating in a final salary scheme, which is also referred to as a defined benefit scheme, entails receiving a secure income from your former employer in accordance with the salary you have earned and the number of years you have contributed to it.
The majority of these programs, however, currently need to be made available to newcomers, with the exception of those employed in the public sector. Presently widespread in the private sector, defined contribution pensions invest contributions from both employers and employees in order to provide a retirement fund. However, they are more frugal, and the investment risk is borne by savers as opposed to employers.
A significant majority of respondents (70%) between the ages of 45 and 54 expressed apprehension regarding the present value of their pension fund, rendering this age group the most anxious regarding retirement.
However, those under the age of 45 are not far behind, with 67% concerned that they will not have enough money for retirement and 57% apprehensive that they will run out of money in retirement.
62% of Scots are also concerned that they will run out of money during their retirement, compared to 68% who are concerned that they will not have sufficient funds for retirement.
Additionally, the southeast region ranked highly, with 64% of respondents expressing concern that they need more and 57% apprehensive that their pension will expire.
With the exception of Yorkshire & the Humber and the east of England, the majority of respondents did not express concern regarding insufficient savings.
Investec’s chartered financial planner Ade Babatunde remarked, “It is concerning to see the large number of individuals with retirement savings who are concerned about not having enough money saved and running out of money in retirement.”
“People worrying about their retirement in advance may account for a portion of it, which is beneficial if it motivates them to increase their savings and seek professional financial advice.”
Individuals ought to strive to accumulate wealth for an extended period, and we strongly advise individuals who are apprehensive about their retirement savings to consult with a financial advisor.
As per the Pension and Lifetime Saving Association, the proportion of recent retirees who are able to supplement their state pension to achieve a moderate lifestyle’s annual income of £31,300 has decreased from one in three to one in five since the previous year.
A couple now needs £43,100 to maintain this standard of living, up from £34,000 the previous year, representing a 27% increase in the minimum standard of living for retirees.
The PLSA revenue figures exclude housing expenses (if you continue to rent or have a mortgage) and care costs.
77% of retirees have reported a decrease in their monthly income since the end of their careers, with a quarter experiencing a decline of more than 50%, according to research by Investec.
Conversely, a mere 4% of those who have yet to retire anticipate an increase in earnings, while 67% anticipate a decline.
Has the opportunity to increase one’s pension passed?
According to Helen Morrissey, the director of retirement analysis at Hargreaves Lansdown, it is advisable to determine your desired lifestyle before calculating the necessary funds to support it.
She told This is Money, “Figures such as the PLSA’s retirement income standards are useful as a starting point, but because everyone has a different idea of what they want their retirement to be like, costs vary.”
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You will be able to determine whether your pension complies with the necessary standards at this juncture. “Pension calculators can be beneficial in determining what you are on track to receive and the potential impact of saving a bit more,” said Morrissey. Frequent use of these can significantly assist in maintaining focus.
Should you perceive your pension to be falling below your desired level, strategies exist that can assist you in augmenting it prior to reaching retirement age.
“Take advantage of every opportunity to increase contributions to your pension,” advises Morrissey. “For example, if you begin working or receive a pay rise, do so.” This is simpler to accomplish before you become accustomed to spending the extra cash.
Your employer may have a contribution matching policy that can augment your pension fund without requiring you to perform the majority of the laborious tasks.
“By actively utilizing your pension throughout your career and implementing these suggestions whenever feasible, you can significantly alleviate the apprehension associated with pensions and enhance your ability to strategize ahead,” advised Morrissey.
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