Just 59% of 50–59-year-olds feel confident they’ll be able to maintain their current lifestyle in a year’s time, far below the UK average of 70% among workers and retirees of all ages.
Over half (51%) of those 50-59 years old have reduced their day-to-day spending (compared to the average of 46% amongst all age groups) because of the cost-of-living crisis.
Workers in their fifties may be perceived as more financially secure than their younger counterparts and ‘looking forward’ to retirement in the not-too-distant future.
But individuals in this group are increasingly facing multiple challenges as they transition to retirement. Many may still have financially dependent children and increasingly may have frail and ageing parents to support.
Risk of compromising future retirement income
Against the backdrop of high borrowing costs and inflationary pressures, one in five (21%) of those in their fifties have dipped into long-term savings, and one in eight (13%) have reduced their contributions to retirement savings. But doing so can seriously compromise future income with limited time to replace funds.
Mental strain from financial pressures
Financial pressures are translating into mental strain. Our research finds over one in three (37%) of those aged 50-59 are ‘very or fairly stressed’ or under mental strain about their current financial situation, compared to one in four (27%) aged under 50 and the one in six (17%) over 60 years old.
The cost-of-living crisis, coupled with the lasting impacts of the Covid pandemic, have had a real impact on those in their fifties. This research shows there is a widespread lack of confidence regarding both current finances and future prospects.
Steven Cameron, Pensions Director at Aegon, said: “Our research brings into sharp focus the plight of those in their fifties. While the pandemic and cost-of-living crisis have impacted all age groups, people in their 50s often have multiple financial pressures and are having to juggle priorities like never before. This is leading to mental strain and a lack of confidence in future finances.
“It is important that the plight of the 50-somethings is not forgotten. The challenges of the cost-of-living crisis are impacting on this group of workers in a profound way.
“For many in this group, every penny is a prisoner. One in every eight workers in their 50s (13%) is reducing or stopping their pension contributions. Others may be tempted to dip into their retirement savings to get by in the short term without fully appreciating the long-term implications – and in doing so may face tougher financial choices later in life. With over one in three (37%) feeling stressed about their current financial situation, we can picture the pressures on those in their 50s.
“A potentially positive development is the move by Government to support and encourage over-50s to remain in or return to employment following the ‘great retirement boom’ during the pandemic. Employers can also reap rewards by tailoring their employment and benefits packages to meet the unique needs of this group.
“With the state pension age likely to keep rising, it’s important to fully recognise the changing future of work and retirement for this and future generations of over-50s.”
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