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Are you planning to retire? A record number aren’t

Are you planning to retire? A record number aren’t

Category: Retirement

Updated: 09/09/2014
First Published: 09/09/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

For many people, the thought of heading into a long and leisurely retirement is what keeps them going throughout their working years. But, according to research from Baring Asset Management, not everyone feels this way – in fact, around one in seven working people don't plan on retiring at all.

According to the findings, 14% of non-retired people aren't planning on retiring, the same record figure as that seen in last year's survey. Overall uncertainty around retirement planning remains high, too – 34% of non-retired people aren't sure of when they'll retire, and even those aged over 65 don't always know. Around a third (30%) of those aged 65+ are uncertain of when they'll retire, up from 18% last year and 15% in 2012.

This is despite the fact that the average age people say they plan to retire is 63 years old – and 61 for people aged 25-34 years old. This paints a bleak picture for future retirees, many of whom could end up working far longer than they anticipated, something which is even more likely given that 33% of those surveyed have no pension arrangements whatsoever.

Rod Aldridge, of Barings, said: "It is apparent that retirement planning, especially among the over-65s, has become increasingly unpredictable over the last few years. We are also concerned that so many people who should have plans in place say they do not have a pension. This confirms the need to focus on effective retirement planning: we urge everyone to seek a better understanding of the benefits they can get from planning ahead and, especially, to think about retirement provision early."

Given that the length of a typical retirement is increasing – in many cases it can stretch to 20, 25 or even 30+ years – it becomes even more important to start planning, and saving, early. Doing so will not only mean you'll have the necessary funds to enjoy a comfortable retirement, but it could also reduce the level of uncertainty around when you'll actually be able to reach that stage.

This is something that could be particularly important for women, as the figures also highlighted the growing gender gap between the pension arrangements of men and women. While the number of men with no pension has steadily declined, from 30% five years ago to 25% today, the number of women with no pension has actually increased, now standing at 41% – up from 39% in 2013.

The difference between men and women in this year's survey – a full 16 percentage points – clearly shows the growing gender gap regarding pension provision. In 2008, when the annual survey was first carried out, the difference stood at just nine percentage points. This is something that clearly needs to be addressed, as having suitable pension arrangements in place is a must for both men and women.

It's hoped that the likes of auto-enrolment, designed to increase the number of people with a suitable pension for later life, will help. Happily, it seems to be having the desired effect – additional figures from Scottish Widows show that half of UK employees on lower incomes, as well as half of those aged 30-49, are now saving adequately for retirement.

The improvements are coming thick and fast, too. The number of people on incomes between £10,000 and £30,000 who are saving adequately for retirement has risen steadily over the last two years, rising from 34% in 2012 (when auto-enrolment was introduced) to 50% today. Meanwhile, the number of those aged 30 to 49 who are saving adequately for retirement now stands at 49%, up from 42% in 2013.

However, there's still a challenge ahead to educate younger workers on the importance of saving for retirement – just 21% of 22-29 year-olds think that the age to start saving for later life is 25 or younger – but the auto-enrolment figures so far are encouraging.

And, if you did decide to start saving early, the difference could be marked. Scottish Widows calculates that, although most people don't think about saving for retirement until their 30s, starting to save five years earlier could add almost a fifth to your retirement income – around £725 annually – while starting to save 10 years earlier could add an extra £1,500 to your annual income throughout retirement.

So, isn't it time you got into the savings habit? Considering how much healthier your pension fund could be, it makes a lot of sense to start saving early. It could even mean you're able to enjoy your golden years sooner than you thought, and ideally you won't be one of the 14% who think that they'll never be able to retire.

What next?

Read our retirement guides

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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