The days of being able to leave work at state retirement age seem to be a dim and distant memory. An increasing number of people are finding they need to work well into their 60s (and sometimes longer) in order to maintain a comfortable standard of living, while one in five think they'll have to "work til they drop".
According to research from Aviva, the typical adult aged 40+ has dreams of retiring at 60 – but a lot of people admit that they won't be able to. Not only do a large proportion think they'll be working until they physically can't continue, three in ten expect to work past state retirement age, with funding day-to-day living costs being the key reason for staying in work.
In fact, 64% are concerned about those costs and a worrying three in ten have no plans in place to fund their retirement, while over half have no idea how much they'll actually need to achieve a comfortable living standard – when in fact the typical pensioner will need around £1,200 coming in per month to reach their expectations.
Clive Bolton, managing director of retirement solutions at Aviva, said: "For many, their retirement is a time they are looking forward to, whether it's to get away from the pressures of work or simply having more time on their hands.
"But worryingly, it seems there are a large number of people who are so concerned about what their financial situation is going to be like, they are beginning to consider the possibility that they will always be working.
"Your state pension is unlikely to cover everything you want to do during your retirement and cover unexpected expenditure, so it's important to have some kind of financial plan in place to provide additional funds to give you some breathing space."
The study highlights the need to plan ahead, particularly as two-thirds of over-40s wish they'd started to plan for retirement earlier, with arranging suitable pensions and saving as much as possible being age-old advice. But, it also shows how important getting the right kind of guidance can be.
This is arguably even more important given the new flexibilities that have been announced in this year's Budget. You may have more freedom to spend your pension pot as you wish but you need to make sure it can work harder for you, and hopefully the Government's promise of a guidance guarantee should help.
However, it seems that a lot of people want that kind of advice to be an ongoing service rather than a one-off interaction, thereby ensuring they make the right kind of decisions throughout retirement. Research from MGM Advantage found that 82% of those aged 55+ thought it was important that they could use the service as many times as they wanted, with only 6% feeling that this wasn't an important factor, and 35% would prefer to access that service in a face-to-face format.
They're expecting a lot from this service too. Some 52% wanted a detailed understanding of all of their options and just 4% would be happy with a basic overview, highlighting the need for the service to be thorough. And why shouldn't consumers want that? There are big decisions to be made, and having the right kind of knowledge and support can make all the difference to the outcome.
There are always going to be plenty of routes you can take when it comes to generating a retirement income. Hopefully you'd have built up a decent pension pot, in which case you can consider the likes of annuities, income drawdown or even withdrawing the lot and making alternative investments. Equity release could be an option for a lot of people too, and it's growing in popularity – figures from Key Retirement Solutions have revealed that a total of £641.8m in equity was released in the first half of 2014, an increase of 26% on a year ago, with the typical loan size increasing to almost £65,000.
It could be put to great use as well. Around 66% of customers used the cash to fund home or garden improvements, 35% used it for holidays, 20% used it to help clear mortgages and a further 30% used it to pay off credit, so it could prove to be a valuable income stream that could – ideally – ensure you don't have to work any longer than you have to.
Ultimately, the decision is yours. It all comes down to your own circumstances and the provisions you've got in place, but if you make sure to plan ahead from as early as possible, hopefully you'll be able to leave work whenever you wish.
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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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