Plans, fears and money: the retirement reality

Forget those ads of retired couples lazing their days away in the sun, the reality of retirement is a little more grim. Interactive Investor did a comprehensive study of 10,000 Brits approaching retirement or already retired. The result is a mixture of the surprising, the grim and the upbeat.

If only I had…

There are concerns and regrets going into retirement and throughout it. The regrets are perhaps somewhat predictable: 17% of respondents wished they started their pension earlier and 32% of non-retirees regretted not saving enough in general. And then there are the regrets about financial decisions. Poor investment decisions is a top financial regret at 17% with 12% regretting sitting on too much cash and not being in the stock market.

While not investing in the stock market might lead to regrets, for retirees who did invest, fear of a stock market crisis is their single biggest concern (42%), outstripping the fear of running out of money (35%), tax issues (24%) and not being able to help the younger generation with large expenses (24%).

Regardless of how well, prudently or carefully people plan for their retirement, worries about insufficient funds is the single biggest concern of non-retirees at 24%, which is more than their concerns about the cost of living (23%), or the cost of long-term good quality healthcare (10%), or being unable to leave an inheritance (9%).

While concerns about health care are prominent, with 24% of 71-75 years old making affording good quality long-term care their number one source of anxiety, it’s possible that not everyone is fully engaged with the reality of ageing. 70% of retirees have no Power of Attorney. As Moira O’Neill, Head of Personal Finance, says about this oversight: “It can wreak real havoc if unexpected health issues crop up.” She sees it as a peace-of-mind piece of paper.

Pension benefits

What does seem to offer more peace of mind is holding a final salary pension. 44% of those surveyed with a final salary pension know what their income in retirement will be, versus two thirds without a final salary pension having no idea or only a vague idea. For those without a final salary pension, 31% say that they will need to make lifestyle changes to maintain their way of living, versus 19% of those with a final salary pension.

Most people approaching retirement favour a DIY approach to their planning, which includes on-line research (42%), reading the financial press (28%) and using a state service such as Pension Wise (23%). Nearly one in five (19%) prefer to have a financial adviser. In comparison, once they’ve retired, 29% pay a financial adviser on a regular basis.  However, still more do DIY online research at 44% and financial presses at 28% with 11% looking to family and friends.

Staying busy in retirement

One solution for money worries and shortfalls is to keep working. 52% of non-retirees plan on staying in work after retirement age, and one in four current retirees still works. Men are twice as likely to keep working for the sheer pleasure of it, whereas women are twice as likely to work due to financial necessity.

Only a third of men (30%) are confident they can maintain their standard of living versus 18% for women. At a substantially higher percentile, women estimate that they will have to make major lifestyle changes to maintain their standard of living (37% of women versus 18% of men), while 7% of men believe their standard of living will suffer, almost double the number of women (13%) do.

Some heartwarming statistics came from this study. One in ten sees retirement as an opportunity to engage with study, almost a third (29%) want to start up a business or take up a hobby and over half (52%) says they intend to do voluntary work for their community. Travelling and holidays are the top priority for 20%, followed by spending more time with family (15%) and exercising more (10%).

On average we’ll spend 40 years working and 30 years in retirement, so it pays to put aside as much money as possible for your retirement years. Find your DIY platform now and start investing.

Photo by Matthew Bennett on Unsplash

Article is accurate at date of writing.