One in five (19%) Brits have spent sleepless nights worrying about retirement planning, according to new research1 from Standard Life’s Retirement Voice report, highlighting the impact thinking about later life has on individuals and the need for accessible support.
Nervousness about preparing for retirement has further negative consequences, with 15% reporting poor mental health and 13% saying they have been unable to focus on other things. For almost one in ten (9%), retirement preparations have caused arguments with their partner or family, while 7% have needed to take time off work too.
Standard Life’s research, conducted among more than 6,000 people, found that consumers are battling these difficulties around retirement planning alone. Among those who have suffered negative effects, the majority (62%) have not sought support or advice to help them through. This rises as retirement approaches, with 74% of 55-to 64-year-olds not seeking help, and 75% of those aged 65 and over also not asking for support to help them cope.
Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group commented: “Preparing for retirement can be daunting, with some big decisions to make. Working out how much money you may need to build up for when you stop earning and deciding how and when to access it is no easy task. Retirement is also a huge life event and choosing when to take the plunge requires thinking about your expectations for later life as whole. This can all weigh heavily on the mind so it’s important to break down planning into smaller stages – such as what age you want to retire, what your retirement options are, and whether you’re on track to support the lifestyle you want later in life.
“Christmas is coming up, and the festive break can be a good time to take a pause and think about your retirement goals, as well as perhaps take the opportunity to talk about what retirement means for you with family and friends.
“It’s always worth getting support with retirement planning. If you’re in a position to seek financial advice, IFA’s can offer you tailored advice based on your specific situation and goals. There are also a number of free guidance services like the government’s Pension Wise that can explain the options available, and remember to also speak to your employer and pension provider.”
Standard Life shares tips to help people feel more reassured about planning life after work:
1. Think about when you want to retire – “The first step is to think about when you'd like to retire. The State Pension forms part of most people’s retirement plans, and the age threshold for this is currently 66 (but will rise to 68 from 2026) so it’s important to be aware of the date that you’ll receive money from the Government as this can be an important source of income. You should also check that the retirement age you have in mind is the one on your pension plans and see if it's possible to update this if it's different, as this will help give you up to date information about your retirement choices. If you’re part of a workplace pension scheme, your retirement age may have been selected for you by your employer. You can normally change this, but this can impact your investments, so check with your employer for more information.
“When considering when to retire, it’s likely you’ll start to think of what the day-to-day reality of life without work will mean for you. While many people are excited by the freedom retirement can offer, some worry about how they will fill their time and maintain their social connections. Many employers and pension providers offer schemes to help prepare for this, and there are some online communities like The Joy Club to help meet like-minded people when retirement comes.”
2. Get to know your retirement options – “Deciding how to take your retirement savings can be one of the more confusing decisions to make. You can normally take your money as flexible income (drawdown); as one or more lump sums; or use it to buy a guaranteed income for life (an annuity). You can also combine these options to suit your needs. You should check with your provider that your pension plan offers the options you want, and if not, you may need to transfer to another provider, although this won’t be right for everyone. Deciding how and when to access your funds is important, so you may wish to get expert advice to help.
3. Calculate how much money you might need when you retire – “It's important to work out your ideal annual income in retirement. This amount will depend on your lifestyle and goals - for example, you might want to go on holidays abroad or do some home improvements. You can learn more about how much you might need by checking the Retirement Living Standards published by the Pensions and Lifetime Savings Association.
4. Check that your savings can support your lifestyle – “You’ll then need to think about whether your savings can support your ideal lifestyle. You should start by checking the value of your pension plans, and what they might be worth in future, which you can do using a pension calculator. Some people supplement their pension savings with things like income from part-time work, rental properties, or other savings, but everyone’s circumstances are different. Thinking about your own financial situation and planning accordingly can help you make sure your money lasts for as long as you need it to.
5. Track down lost pension pots – “If you’ve had jobs that came with a pension plan, check that you haven’t ‘lost’ any of these pots of money. To help you track down your pots, you can use the government's Pension Tracing Service. Finding your pots and combining them into a single plan with a pension transfer could give you a clearer picture of how much you currently have in pension savings, and help you with retirement planning, but you should seek advice if you are interested in doing this.”
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