PENSION awareness day has arrived and the Money and Pensions Service (MaPS) has released research which detailed some worrying findings. According to their analysis, three million over-50s will leave their retirement planning to the final two years before stopping work.
Pension planning can be a difficult and daunting task but it is nonetheless essential. Therefore, it does not bode well that over a third (37 percent) of over 50s are leaving their retirement financial plans until their final two years before retirement or won’t prepare at all.
Additionally, late term planning of this nature may affect more people than ever this year.
In 2020, around 940,000 people will be turning 55, the highest number seen in nearly two decades.
The new research, which surveyed people aged 50-70 with pension savings, revealed that those unretired and unprepared for retirement, as the following attests to:
- 69 percent of respondents have done either none, or very little, planning around retirement finances
- A mere 7 percent of over 50s feel fully prepared
- Over a quarter (27 percent) say they will only start planning their retirement finances with two years or less to go before retirement, equating to 3 million over-50’s planning late
- 10 percent won’t plan their retirement finances at all
Existing generations of retirees are warning those to come to take action on this before it’s too late.
Recent retirees are urging generation X (those currently aged between 40 and 55) to use this phase of their lives to become better prepared, with over half of retirees agreeing that unretired over-50’s should start planning their retirement finances earlier.
These recent retirees provided five tips for the next generation to follow to ensure they’re ready for their final years:
- Save more towards your retirement (60 percent)
- Start planning retirement finances earlier (56 percent)
- Take time to decide on how you will access retirement savings (45 percent)
- Find out more about making the most of your pension money (44 percent)
- Seek guidance on how to best organise your retirement finances (41 percent)
Carolyn Jones, the Head of Pensions Policy and Strategy at Money and Pensions Service, commented on these findings: “Given over a third of over-50s have had their finances affected by Covid-19 and we’re now facing a recession, we’re urging people not to delay or skip planning their retirement finances – whether you’re thinking of retiring later or bringing it forward.
“Your pension is likely to be one of the most valuable assets you hold so it’s really important to start planning early to make sure you make the best choices based on your circumstances.
“Getting help and talking through your options now could be the difference between having a comfortable retirement or having to work for longer or adjust to living on a lower income.
“We know that taking pension’s guidance works.
“People who have had an appointment with our Pension Wise specialists feel more confident, informed and prepared when it comes to how they will access their pension savings.
“In 2019/20, more than half of appointment customers said that getting guidance either changed how they accessed their pension, or how they intend to do so.”
Daniela Wilson, a Pensions Guider at Pensions Wise, also shared her insight on what’s important for retirees: “I discuss pension options with the public every day and one of the most common worries is feeling unprepared when it comes to making decisions with pension providers.
“Chatting through the different options for as little as 45 minutes has made nine in 10 of our customers (92 percent) feel well prepared ahead of speaking to their providers.
“This small commitment of time to talk through options can help with general wellbeing as well as aiding decision making when it comes to accessing their pension pots.”
“As well as offering our usual telephone appointments to provide that guidance, during Pensions Awareness Week we’ll be hosting a virtual drop-in session where any burning questions can be asked as well as general discussion about preparation.”
Pension Wise can provide impartial guidance for worried savers but additionally, people can also turn to the Money Advice Service or Citizens Advice for help.
The government’s own website is also regularly being updated with information on how coronavirus is impacting pensions, mortgages and other financial assets.