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Are you experiencing a midlife pensions crisis?

Are you experiencing a midlife pensions crisis?

Category: Pensions

Updated: 17/06/2016
First Published: 17/06/2016

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 It is now over 6 months old so the content may be out of date.

We've all heard the cliché of having a midlife crisis, but it seems that it could be truer than you may think – particularly in the financial sense. In fact, research from Just Retirement has found that many 40-somethings are experiencing a dramatic crisis of confidence when it comes to their pensions, with few predicting a comfortable retirement outcome.

The research found that those in their early 40s were the most pessimistic about their retirement outlook, with just one in 10 feeling that their retirement planning would ensure a comfortable retirement, and just 13% said they were looking forward to that time of life.

Being insufficiently prepared is weighing heavily on their minds, too, with 31% of 40-45 year-olds wishing they'd started sorting things sooner, while 18% said they find pension planning confusing and 10% dread making irreversible choices. Their financial stability was also a concern, with 26% expecting to keep working long into traditional retirement age as they'd need the money, and 18% admitting that they'd need to "make some tough decisions".

However, things seem to improve with age, perhaps as people begin to take the necessary steps, or simply because they realise that retirement may not be so bad after all. For example, the survey found that those in their early 50s are more likely to believe they'll be comfortable in retirement (25%) and to look forward to that stage of life (16%), and are significantly less likely to dread making retirement choices. (4%).

"When people reach their 40th birthday, the idea that they will eventually retire really hits home and the challenge of retirement planning means that they can suffer a midlife pensions crisis," said Stephen Lowe of Just Retirement. "This appears to be characterised by confusion, lack of confidence in their retirement provision and concerns about what might happen.

"However – as with the more traditional midlife crisis – as they age and start to take positive steps to meet these challenges, they start to worry less about their retirement, until by their early sixties almost a third are looking forward to this new stage in life."

But this doesn't mean that 60-year-olds are completely confident about the whole thing. Indeed, the figures still suggest that fewer than half of people in their early 60s (43%) believe they will be comfortable in retirement, and given that they're not far away from it, this is particularly concerning.

Essentially, this all highlights the need to start planning early, as the best way to be confident about your retirement aspirations is to take the necessary steps to ensure they become a reality.

"Taking proactive steps, such as speaking to an independent financial adviser, enrolling into a workplace pension scheme and making choices that will ensure you have a guaranteed income in retirement, are vital," reiterates Stephen. "No one wants to reach traditional retirement age and find that they are still as worried and confused as they were 20 years before."

Don't wait until the last minute before you seek advice, either. There's currently a debate about offering access to the Government's guidance service Pension Wise from the age of 50, but as Stephen points out, the figures suggest that some people may value having access to this kind of support from an even earlier age.

So why wait? Knowing what you're doing from an early age can make the process far less stressful, and it can give you the confidence you need to know that your retirement will live up to expectations. Start by joining your workplace pension
if you haven't already, and don't be afraid to seek independent financial advice to help make your money work as hard as possible throughout your working life. This way, you may be able to approach retirement without the midlife pensions crisis hitting.

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.