Have you seen your retirement plans derailed in the past few months?
If they have, you’re certainly not alone, as huge swathes of people have unfortunately suffered the same affliction. Nearly one fifth of those aged 50 or over believe their retirement will be negatively impacted by the pandemic. Of these, a quarter have not been able to retire due to their finances and a fifth have had to dip into their retirement savings whilst not working. A tenth have retired sooner than expected because of redundancy1.
Employees in certain industries, already finding it challenging to save into a pension, could be especially hard-hit and face a lifetime of playing catch-up with their retirement savings2. Over a quarter of those working in the arts and travel industries have not even started saving into a pension. Two-thirds of retail workers worry they would quickly run out of money if they did retire.
Not all bad news
Thanks to auto enrolment, over ten million people have saved into a workplace pension. But there are signs that the positive impact is receding, with nearly half of those aged 22 to 29 still not doing enough to prepare for later life, with many facing retirement poverty. Whatever stage you’re at and whatever sector of the economy you work in, it’s never too early or too late to get your retirement plan on track.
Young and old – strategies
If you’re younger, don’t let any falls in income impact your pension contributions if possible. Small, regular contributions throughout your life can build up and make a difference to the quality of your retirement.
If you’re older, it’s possible you’re thinking about postponing retirement. Or, if you lose your job, you might choose to retire earlier than intended. If you still have a job but your savings have been impacted, one option may be to delay retirement to give yourself more time to prepare.
For many people, it’s the financial impact of the pandemic, rather than personal choice, which has driven decisions about their retirement. Don’t rush into making life-changing financial decisions. We want you to be in control of your retirement and to have options. Whatever your personal circumstances, we’re here for all your financial planning needs.
1Co-op, 2020, 2Scottish Widows, 2020
WORDS Mark Birch