Only 25% of retirees are ‘very confident’ they have enough funds to finance retirement – are you?

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A recent survey from Abrdn, a global investment company and asset manager has provided a snapshot of people who have or plan to retire in 2022. Whatever stage you are at in your retirement planning, the research offers an interesting insight.

‘When do you plan to stop working?’ surveyed 2,000 people who were either due to retire in the next 12 months, or have retired in the past 12 months, with results suggesting that their plans may not fully reach fruition.

Not prepared for retirement

No fewer than 55% of respondents said they had or would be retiring earlier than planned, a jump from 37% in their previous survey. A further 20% said their retirement was deferred, with one in five retirees saying the reason being that they had not yet saved enough. That leaves only 25% who retired as planned, a reminder that building flexibility into your planning should be a must have rather than a nice to have.

Only 25% of the retirees surveyed felt ‘very confident’ that they had enough funds to finance their retirement, down from 30% in 2021. This fall is related to the rising cost of living, which was flagged as a concern by many. It may also explain why two thirds of the retirees said they would carry on with some form of work, including potentially starting their own business.

Plans to continue working

However, continuation of work may be an optimistic assumption. The latest data from the Office of National Statistics shows that only 10.6% of those aged 65 and over are in employment. Of the 2021 retirees who were still doing some work, a third said they have or will take ad-hoc jobs in the gig economy. Surprisingly, less than one in seven of the 2021 retirees had mapped out how much they could afford to spend each year, so perhaps the number of people looking for this type of employment could well go up in the future.

Supporting family members

A little over half of the 2022 retirees also hoped to pass on wealth to their children or grandchildren, but fewer than one in four felt very confident about how to do so. The 2021 retirees could give them a clue. Of the 40% of 2021 retirees who said they were spending more than anticipated, the most common reason was supporting family members in financial difficulty – it seems the Bank of Mum and Dad never retires!

Retirement planning in your 50s

Don’t leave your pension planning until it is too late. If you find yourself having reached your 50s and further retirement planning is still required this is a crunch time when saving for your retirement.

There are some questions you might want to ask yourself to help you plan better: When do I want to retire? Can I retire early?  How much income do I want in retirement? Do I have enough in my pension pot to retire comfortably? How much will my state pension be?

A comfortable lifestyle means different things to different people. If you’re in your 50s, it’s important to make retirement planning a priority if you haven’t done so already. At this age, retirement is no longer a distant concept, and time is short if your plans aren’t on track.

One of the most important things to do in your 50s is to work out how much money you’ll need to retire comfortably. There are many other variables to consider, including the age that you plan to retire, your life expectancy, your income requirements in retirement, inflation, tax rates, and whether you qualify for the state pension. Given the number of variables, this part of the retirement planning process is not always straightforward.

Review on a regular basis

Finally, for those at this stage of their lives it’s really important to review your retirement planning on a regular basis alongside your personal finances. A regular review will ensure healthy progression towards retirement by checking that you are firmly on track with your retirement goals. This is the time to adjust your plan to fit any evolving needs and desires for your post-retirement years. We all change as people over time, and our pension pot needs to reflect our most current reality. Retirement planning is a continual process, and the more often you review your progress, the more prepared you’ll be for retirement and the more in control you’ll feel. As a minimum, aim to review your retirement planning at least once annually to ensure that you’re on track to achieving your retirement goals.

If any of the survey’s results above sound uncomfortably familiar to you, take the time to do what only 18% of the 2022 retirees did and seek professional financial advice about your retirement plans.

At Armstrong Watson our quest is to help our clients achieve prosperity, a secure future and peace of mind. Whatever stage you’re at, we’ll give you a clear idea of how much you’ll need to afford the lifestyle you want in retirement and provide regular reviews to keep you on track.