New research from Seven Investment Management (7IM) shows early retirement is an impossible dream for many, with one in seven expecting to work until they are 75 and beyond.
Meanwhile, despite the raised profile of retirement saving following the introduction of workplace pension schemes, some 35 per cent are currently saving nothing and 15 per cent are unsure of what their position is. Some 12 per cent are taking a ‘live for today’ approach rather than focussing on retirement plans.
Yet many are still hoping that ‘it will all turn out alright in the end’. Some 10 per cent are ‘inheritance hopefuls’, whilst one in twelve ‘downsizers’ are relying on the value of their property to come good.
The five-year gap
People expect to be forced to work, on average, at least five years longer than they would like and whilst £23,000 a year is the amount estimated for a comfortable retirement, only one in ten say they are on track for a comfortable retirement. 39 per cent think they need to increase the amounts they save.
On average, people would like to retire at 62, but expect to have to keep on working until they are 67. 14 per cent are expecting to work to 75 and beyond but only 4 per cent like the idea.
Lack of financial education
Whilst 7IM has been running a ‘we need to talk about’ campaign, calling for more financial education on pensions, around a quarter (24 per cent) don’t want to talk, with a lack of knowledge being part of the problem. Some 10 per cent feel ‘caught in the headlights’, saying their limited understanding of retirement planning puts them off. Similarly, 18 per cent (‘head in the sand’) say they try not to think about retirement planning because it makes them worry.
Matthew Yeates, Quantitative Investment Manager, 7IM, said: “When it comes to pensions, many are taking an ‘it’ll be alright on the night’ approach, with inheritance or downsizing being counted upon as the ultimate fall back. But there are no givens, perhaps even less so in austerity Britain and since most people can no longer access final salary pension schemes.
“A lack of financial education is holding many people back – it’s just too scary an issue for many to think about, let alone talk about. But talking is exactly what needs to happen, and seeking financial advice can really help clarify goals and attitudes to risk. On a positive note, some people are keen to take advantage of better health and improved longevity to carry on working into their 70s. However, most people want to retire early and know they can’t – and for some retirement at any age is now just a dream.”