The year 2020 will forever be remembered for COVID19. We’ve all been affected, whether by the tragic loss of loved ones, personal physical or mental health, job loss or redundancy, our inability to meet with family and loved ones and / or the curtailment of our social freedoms.
According to new research conducted on behalf of Legal & General, it seems likely that the retirement plans of the over 50s have also been particularly badly affected.
Already over 1.5 million workers aged 50+ have decided to delay their retirement as a direct result of the pandemic. In particular, those who have taken a pay cut or have been furloughed. And the research shows that those in this age group are just as likely as younger workers to be made redundant and more likely to suffer a pay cut.
The research was conducted with a nationally representative sample of c2,000 people aged 50-59 years. It found that by August 2020, the retirement savings of respondents had decreased by an average of £165 a month. Faced with trying to make ends meet, many people in this age group have chosen to opt-out of their workplace pension schemes altogether.
The consequences of these decisions are far-reaching. Based on calculations undertaken by the Legal & General, those aged 50 who have taken the decision to opt-out of their workplace schemes could be nearly £100,000 worse off by the age of 75 if they never opt back in and continue to work full-time throughout.
The good news is that the sooner pensions contributions can be reinstated, the better the chances to minimise any losses made. Opting out may seem like a sensible – or possibly the only – solution to short-term cash flow problems, whether caused by a global pandemic or any other cause. However, it should only ever be seen as a temporary solution.
Sadly, we are still in the midst of the Coronavirus pandemic and it’s sometimes difficult to see the light at the end of the tunnel. However, there is a light and we will eventually emerge. When that happens, reinstating your pension contributions must be seen as a priority.
If you would like help or advice regarding your retirement or financial planning, please do get in touch with your Brunsdon Financial Adviser or contact us on enquire@brunsdonfinancial.co.uk.
Investments can fall as well as rise, irrespective of the level of risk chosen, and the value of an investment and any income generated from it cannot be guaranteed and can fall as well as rise as a result of market volatility. You may not get back the amount you originally invested.
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