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Are you prepared financially for retirement?

Posted on 10/11/2017

Retirement can seem a long way off, but it comes around soon enough and many of us are ill-prepared financially for the next stage of life, when working income drops and care needs begin to increase. We may be watching our own older relatives and looking at how we can help them, which can make us turn our thoughts to our own wants for later life.

A new report by Age UK suggests that half of workers in the UK won’t have enough money to retire when they reach State Pension Age. The charity undertook a survey through YouGov of workers aged 40-64. A third of those asked said that they expected to be working the same hours in their current job in their late 60s as they do now, and a quarter expected to still be working in their current job, but fewer hours. Around 21% said that they did not expect to be working in their current job at this point. The main reasons for lowering hours or stopping work before reaching late 60s was expected to be poor health or because their job is physically demanding; only 17% of those who expected to stop working said it was because they would be financially secure enough to do so. 

Age UK is driving a public policy paper that suggests a ‘Career MOT at 50’ is needed so that people have time to adjust their future working plans and start to save money for a pension to help them be more financially secure in later life. This may include retraining into a new role, taking further qualifications to enhance a wage or ensuring a suitable pension policy is in place.

This survey paints a similar picture to information from the Financial Conduct Authority, which has recently released its Financial Lives survey. This report asks 13,000 UK consumers about their finances. It found that about a third of UK adults have no private pension provision in place, which means that they will have to rely on the State Pension when they retire unless they put a policy in place before then. For those who are already aged 65 or over, the State Pension is the main source of income for 49% of those surveyed.   

As the life expectancy continues to rise, the period of our lives from retirement onwards is longer than ever. This means that our living costs are higher and we are also more likely to need to access some form of care and support. It certainly pays to think about preparing for later life as soon as possible, making sure that a pension provision is in place to support the State Pension income. With ‘Automatic enrolment’ more people than ever will have an employer-supported pension in place, but for those who are self-employed, it’s important to ensure that a personal pension is set up.

Find out more on how to prepare for a longer life:

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