Will your pension last?

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Standard Life Aberdeen (SLA) has published a “Class of 2021” report, based on a survey of 2000 adults who plan to retire within 12 months.

SLA found that almost two in five (37%) of people who are close to retirement have accelerated retirement due to the coronavirus pandemic, but worryingly also identified that two thirds (66%) of 2021 retirees risk not having the pension savings to sustain their planned retirement income.

 

 

At Investment & Retirement Solutions we find most clients benefit hugely as they approach retirement from cashflow modelling: examining the assets available to produce income and capital to meet needs during retirement.

SLA’s research found that a 2021 retiree plans to spend, on average, £21,000 a year in retirement – almost £10,000 less than the average UK household income (£29,900).

Based on this £21,000 figure, a retiree would need savings of around £390,000 on top of their state pension for a 30-year retirement.

However, looking at their pension pots, and factoring in the money they’ll receive from their State Pension, analysis shows that two thirds (66%) are at risk of running out of money.

The average value of a Class of 2021 pension pot is £366,000 – but a third (33%) admitted to having less than £100,000 saved.

The research also found that more than a third (37%) of those planning to retire this year are worried about not having enough money to last throughout retirement.

Just two in five (39%) feel very confident that they’re financially ready to finish working this year, with a third (34%) of women feeling very confident versus two in five (43%) men.

Almost half (48%) are planning to reduce their usual spending to support themselves in retirement, while a quarter (27%) will work part-time to help financially. One in five (21%) are planning to sell their home or downsize to fund retirement.

However, there are clearly some apprehensions about retiring during a pandemic amongst this year’s retirees. More than half (51%) are worried about not being able to do things they planned, while two in five (43%) are concerned they won’t be able to see friends and family.

When it comes to their finances,  SLA found that three in ten (29%) have concerns about their pension falling in volatile markets, and almost one in five (17%) have seen their income fall over the past year.

To read the full report on the Aberdeen Standard website please click HERE

To understand retirement options and how lifetime cashflow modelling might help please contact us.

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