The first chapter in the 2017 State of Retirement report outlines typical financial situations for retirees, before and at retirement age.
Research from LV='s 2017 State of Retirement report found that over 45’s are spending longer planning a holiday than their retirement.
The pensions landscape
Since the pension freedoms in 2015, you now have more flexibility and choice when it comes to your retirement options. However, the increasing amount of choice has caused confusion and means people need to start thinking about and planning their retirement earlier.
However, research from LV= found those people approaching the minimum retirement age of 55 [1] are spending worryingly little time thinking about their retirement options.
LV= found 51% of respondents aged 45-54 didn’t think about their retirement at all last year. Those that did, spent more time planning a holiday than their retirement. They spent an average of three hours and 42 minutes planning their retirement, compared to five hours 42 planning a holiday. People even spent longer planning for redecorating a room than their retirement - which came out as five hours 6 minutes.
Saving for your retirement
The research also found 62% of 45-54 year olds don’t know how much they have saved for retirement.
If people were to spend more time planning for their retirement (than perhaps organising a holiday) it might put them in a better position to understand whether they are saving enough of their hard-earned money to live off in their retirement years.
Of those surveyed who are aged 50 and over, will on average expect to need around £1,360 a month to live comfortably in retirement, but this means someone retiring at 55 would need to have around £311,000 [2] saved, assuming they qualify for the full state pension. The average pension saving for those surveyed aged 45-54 is £71,342 and 39% of those have less than £50,000 and 13% have nothing at all.
Top tips to help you make a retirement plan:
If you’re approaching retirement, we've put together some top tips to help you get organised and start planning for your retirement.- Track down your lost pensions – If you’ve lost track of your pensions, whether it’s an LV= pension or non-LV= pension, go to our lost pensions page.
- Consider consolidating your pensions – If you have more than one pension pot, why not bring them all together? You could get a better investment performance. .
- Check your other assets – If you make a list of your other savings and investments, this might help you understand how much you have to fund your retirement.
- Financial advisers – Why not consider speaking to an authorised financial adviser? Regulated retirement advice is the best way to help you make the most from your savings.
- Review the state pension - It's unlikely that this will be enough to see you through retirement on its own, but it will help - so keep up to date with the state pension.
Citations
[1] 55 is the earliest age at which people are able to access their pension. The average age of those who say they plan to retire within the next 6-10 years is 49 years old and FCA data showed 40% of people who accessed their pension pots between July-September 2016 were aged 55-59.
Methodology for consumer survey: Opinium, on behalf of LV=, conducted online interviews with 2,404 UK adults between 12th and 27th March 2017. Data has been weighted to reflect a nationally representative audience.
[2] Methodology for retirement income: LV= calculated the size of pension pot needed to give someone in good health a monthly income of £1,361 (or annual income of £16,332) from the age of 55 until death, and 65 until death, including the full state pension. To provide a guaranteed income between 55 and 65, LV= calculated the pot size needed to purchase an LV= Protected Retirement Plan over 10 years. To provide an income after 65, once the state pension kicks in, three comparison annuity quotes were produced with major providers for someone retiring at 65 and an average figure was taken for each. All quotes are gender neutral and assume a single life annuity with no death benefits. Total pot size required at age 55. LV= Protected Retirement Plan pot of £153,000 and at age 65 Annuity pot of £158,000 = £311,000. All figures based on quotes dated 19/04/2017.
