Recent reports suggest retirement planning is being widely neglected. How much attention have you given to planning for your retirement?
If the answer is ‘very little’ or ‘no attention at all’, you are not alone. Research undertaken by a UK asset management company has revealed that almost half the population has never reviewed its pension plans.
Leaving your retirement plans to gather dust is a dangerous strategy when the new Government is making far-reaching changes to private and state pensions provision. For example, if you currently plan to retire at age 65, your first year of retirement could turn out to be rather lean as a result of the Government’s announcement that the universal state pension age will be 66 by April 2020. Remember, state pension age is not just when the state pension starts. It also determines when you begin to receive and additional pension (state earnings related pension (SERPS) and/or state second pension (S2P)) paid by the state.
One ‘solution’ to the issue of retirement planning that some people suggest is to keep working and never retire. Other research has revealed that 10% of the working population claims to have adopted this approach and has no intention of retiring; it aims to work until it drops. Tellingly, the proportion of would-be non-retirees rises to 15% for those aged between 55 and 64. Employment rates for those aged 65 and over are already rising; more than 1 in 12 of those aged 65 or over are still working.
The decision to work rather than retire should be made out of personal choice, not financial necessity. You may feel happy about working past 65, but how about after age 75 or even 85? That may sound extreme, but the most recent projections from the Government’s Actuary’s Department predict that a man reaching age 65 in 2030 will live, on average, another 23.9 years. The life expectancy for a woman aged 65 in 2030 takes her beyond age 91.
If you are in the half of the population that has never reviewed its retirement planning, now is the time to end inertia. Doing nothing should only be an option once you have retired!
Peter Davies, Senior Planner at Create Wealth Management