Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown: “Retirement may seem like a long way away, but checking your progress against your goals periodically is vital if you are going to avoid a nasty reality check later down the line. Our data shows only 61% of people thought it was a realistic prospect that they would be able to cover their bills in retirement – this struggle to even cover the basics is a far cry from the sandy beach holiday view of retirement that many people aspire to.
Those closest to retirement – the over 55s - are a bit more optimistic, with two-thirds of them saying they can realistically cover their bills. However, this confidence dips markedly down to just 56% among the 35-54 age group, though they still have time to make up any gaps in their planning.
The 35-54 age group seem the most pessimistic about their retirement prospects. Less than a quarter (23%) thought it was realistic that they wouldn’t have to worry about money in retirement. This compares to 29% of the over 55s and 35% of the 18-34 age group. Similarly, only 39% thought they would realistically have enough money to cover emergencies compared to 46% of the over 55s and 51% of the younger age group.
This anxiety is perhaps understandable given the financial challenges this group in particular faces. They are more likely to be paying off mortgages and have children still at home. This squeeze on their budgets can make it difficult to set aside money for the future and this is something that has only been heightened by the current cost of living crisis which has pushed up the price of all our basics.
The upshot of this is that we all have tough decisions to make regarding our retirements. There are signs of older workers, who retired during the pandemic, starting to return to the workforce as their costs rise. We will likely see more people continuing to work longer, even on a part-time basis, to make up gaps in their pension planning.
Younger age groups still have time to build up their pensions to give themselves a more resilient retirement. Things are undoubtedly tough right now but as things get better it can really boost your pension pot if you are able to increase contributions as and when you receive pay rises or move jobs. If you are in a scheme where your employer matches any increase in contributions you make then this can provide a further boost to what you end up with and make you feel more confident of not just being able to cover the basics in retirement but to be able to enjoy things like holidays and hobbies too.”
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