It’s Stress Awareness Week (7-11 November)… so how stressed are YOU about your later life planning? According to Aviva, more than three in five people (61%) feel stressed when they think about their retirement – a figure that rises to almost three-quarters (74%) of 25–34-year-olds.
Reassuringly, it appears that the close to retirement people are, the less tendency they will have to have sleepless nights over it. That said, almost six out of ten of those aged 55+ still harbour concerns.
Unsurprisingly, given the current economic climate, the most pressing questions for the majority of those who responded are: whether or not they will have enough money set aside at retirement to do all the things they want to do (71%); how long their pension pot will last (65%); whether or not they are paying enough into their pension pot (59%); and how early they need to start paying into a pension (49%).
Alistair McQueen, Head of Savings and Retirement at Aviva says: “It’s only natural, in a world where most people are worried about things that are beyond your control – the rising cost of living, increasing inflation, and interest rates that haven’t been seen for years – that you may also feel out of your depth when it comes to things like pensions and later life preparations. However, with a little planning, and simple rules of thumb, you can easily feel more in control of your savings and know if you are on track for the lifestyle you want in your retirement.”
| % of respondents who say they find the following questions “stressful”, split into age groups | ||||||
| Questions | Age | |||||
| Average % stressed across all age groups | 16-24 | 25-34 | 35-44 | 45-54 | 55+ | |
| Will I have enough money to do the things I want to do when I retire? | 71% | 72% | 85% | 82% | 75% | 59% |
| Will I have enough money to retire as early as I would like to? | 66% | 68% | 81% | 78% | 73% | 50% |
| How long will my pension last me? | 65% | 65% | 80% | 75% | 71% | 51% |
| Am I paying enough into my pension? | 59% | 61% | 77% | 72% | 69% | 42% |
| How long will retirement be? | 59% | 64% | 74% | 70% | 63% | 45% |
| Will I have enough money to help my children/grandchildren when I retire? | 56% | 65% | 73% | 66% | 55% | 41% |
| Should I have more than one pension? | 50% | 57% | 70% | 63% | 53% | 34% |
| How early do I need to pay into my pension? | 49% | 57% | 70% | 64% | 52% | 30% |
Aviva also offers some guidance that could give you greater control over when you retire and with how much money:
- How long? Aim to save for your retirement at least 40 years before you want to retire. The later you leave it, the more you will need to save each month to reach your target.
- How much? Try to save at least 12.5% of your salary towards your pension every month – this may seem challenging at the moment but something to aim for. And remember, this can include money from you, your employer, and the government.
- Final pot size? Aim to amass a pension pot of at least 10 times your salary by the time you retire.
- Tax relief: Take advantage of the tax relief offered by the government to boost your savings. When saving in a pension, for every £8 you save, the tax man adds an extra £2.
- Employer contributions: Every employer in the UK must provide eligible employees with a workplace pension. Not only that, but they must contribute to this pension. Some employers will contribute more if you save more, helping towards the 12.5% target.
- Invest wisely: By investing your money, in a pension or elsewhere, your money can grow through to your target retirement date.
- Investment Risk: The value of investments can go down as well as up and you may get back less than has been invested but remember that investing in a pension is a long-term investment and over time you could reap greater rewards.
- Keep checking: Saving for your retirement should not be a “set and forget” activity. Use your annual pension statement to check if you are on track for your retirement target.
- Reframe your expectations: Life expectancy in retirement could be 20 years or more, so bear in mind how long your money may need to last.
- Shop around: When it comes to retiring – shop around. The retirement incomes on offer in return for your amassed pension pot will likely differ. Find the best deal for you as this could make a significant difference to your income throughout the rest of your life.
- Use the pension freedoms: Since 2015 the pension freedoms allow more flexibility in retirement planning but take time to understand the options before acting. A free government-sponsored website calledwww.pensionwise.gov.uk explains this in more detail.
- Search for lost pensions: There are close to 3m lost pensions in the UK where pension providers/ customers have lost touch with each other, this equates to £26.6bn, or £9,470 per person if you think you’ve lost touch with a pension check with the Pension Tracing Service.
And, of course, you can discover precisely whether your retirement plans are on track by making regular use of the RetireEasy LifePlan online planning tool, which will tell you at a glance whether you should start to save more, change your planned retirement date if you can afford to help out a family member with a lump sum and – critically – how much you should be able to comfortably spend each year in retirement without running out of cash.
If your subscription has lapsed, or you’d like to try it out for the first time, click here: www.retireeasy.co.uk
