The Covid-19 global pandemic has caused around a fifth of people in the UK to reconsider and delay their retirement plans.
There’s no denying the UK’s retirement landscape has shifted in recent times as people continue to live and work longer, something that needs to be factored in when it comes to financial planning for those later years. Of course, we all hope to have a comfortable lifestyle and be in a position to enjoy life when we stop working.
But new research released by the British Seniors State of Retirement Report suggests that the retirement dream has, for some, been threatened with the emergence of Covid-19. It claims that 22% of UK adults have had to put their plans on hold, with around 77% of over 50s stating that the pandemic had “severely impacted” their arrangements. Around 8% have said that they can no longer afford to retire. These figures are an increase on research released from Aegon last year that suggested 18% of adults have had their plans altered due to the pandemic.
A little longer to wait
Those now approaching the retirement age of 67 have experienced their fair share of economic turmoil over the years and now have a global health crisis to contend with, pushing the retirement dream a little further down the line for some it seems. The recent data, published by British Seniors from a survey of 1500 people aged 50 and over, revealed that the average delay of retirement plans currently stands at two and a half years.
The report also highlighted that 17% of adults over 50 have had to dip into savings over the last year and 19% are concerned about the long-term impact on the future of their children’s finances.
As well as illustrating the impact of Covid-19 on retirement plans, the British Seniors research also focussed on retirement readiness, finding that just a third of over 50s have taken proactive steps in their retirement planning, whilst 38% believe they’ll struggle financially once they stop working. And that while 12% have cut back on spending in their 50s, 33% of those asked don’t actually know the size of their pension pot.
Preparing for later life and the unexpected
The British Seniors data also illustrates that despite the uncertainty faced by many, a small number of those surveyed (8%) claimed the pandemic had actually led them to consider retiring earlier than planned, with 28% admitting to being concerned for their health and 54% stating they had enjoyed spending more time at home.
A pandemic isn’t the only reason that has caused uncertainty among those approaching retirement age. Poor budgeting also seems to play a part, as figures released by Standard Life recently suggest up to a quarter of those aged 55 to 64 who are still in work are only preparing for their retirement fund to last a maximum of 10 years. One in 10 of those surveyed are planning for their funds to support them for just five years. With today’s current average life expectancy of 82 years, it seems that preparation for life after work may need to be higher on the agenda for some.
The research also claimed that around three in 10 of those surveyed are expecting to live on the same amount of money each year throughout retirement. However, with some people wanting to travel in the earlier years or with costs arising later due to health care or assisted living needs, it’s clear that budgeting for all possibilities is sensible.
More than anything else, what both surveys show is that while we cannot always plan for every eventuality, it certainly makes sense to be as prepared as possible and to have contingency plans in place should the unexpected (such as a global pandemic) happen. While avoiding the topic may seem easier, facing these decisions earlier rather than later will ensure a more comfortable future when you do decide to give up work.