Lack of Savings Delays Retirement

More and more people in Britain expect to work past retirement age

Reports out earlier this year suggest that the vast majority of Britons expect to work well past pension age. The reason being a perceived lack of savings.

Working into retirement

A survey undertaken earlier this year by Canada Life Group Insurance has found that 73% of people say that they expect to past the age of 65. Additionally, one in ten say that they might never quit work at all.

Of the people surveyed, a third said they would willingly work as long as possible, because they enjoy their job. However, the majority of people do want to retire, but expect to have to work past the traditional retirement age, because their pensions savings are just not large enough.

It appears that an increasing number of us worry that our pension pots are just not big enough, and that the low returns on savings just won’t give us enough to get by. And the number who fear this is increasing – up from 67 per cent last year and 61 per cent in 2015.

Lack of Savings and Returns

For most UK workers, the lack of pension savings is the main reason why they expect to have to work into their retirement years. More than a third of those surveyed by Canada Life said that their current savings funds will not be sufficient to keep them throughout retirement.

A similar proportion also blamed their situation on low return on savings, with 31 per cent saying they will delay their retirement plans compared to 23 per cent last year.

The survey also discovered that plenty of people who want to retire worry that they won’t be able to. More than a third of the people surveyed, who intend to retire beyond the age of 65, don’t think they will be able to until they are older than 70. And one in ten expect to be at least 85, if they can ever retire at all.

What are your retirement plans?

Even though interest rates have risen, returns on many investments remain static. This is having a direct impact on UK workers’ retirement plans, with many fearing that they will have to work longer than they would have hoped to.As inflation continues to rise, eating into the purchasing power of UK savings, this problem will only become more pronounced.

The key is that many people believe they have insufficient pension savings. Unsurprisingly, younger workers are particularly likely to expect to work past the age of 65, with 84 per cent of 25-34s thinking so.

However, there are options that savers can take. If you are in the fortunate position to have a final salary pension there are extremely high transfer values available which can free up cash giving large lump sum benefits.

Don’t do too little too late

Many people don’t need huge amounts of savings if you have a regular income in retirement, however, they do need to plan. With the right planning retirement might not be the faraway dream many believe it is.

When it comes to providing for retirement many people do too little too late. Putting away even a small sum early on can make a big difference to the lifestyle you will enjoy when you retire. The golden rule for most people, is not to rely on the State alone. Most pensions benefit from tax breaks that can help provide what you don’t have.

Plan for your retirement

Today there are a number of tax efficient ways of providing for a comfortable retirement. The area is complex and choosing the right vehicle requires a detailed understanding of your personal circumstances, tax position, employment status and more. Haven IFA Ltd can provide detailed advice following a thorough financial review to help you plan properly. With the right plans in place, you might be able to retire exactly when you want, if not earlier!