Retirement Income  

Retirement dreams dashed as Covid interferes with plans

Retirement dreams dashed as Covid interferes with plans

Coronavirus has hit the retirement prospects of a large chunk of the population as a mere quarter now believe their lifestyle will improve when they stop working.

According to Interactive Investor’s annual retirement survey, published today (October 21), in 2019 more than half (51 per cent) of non-retired individuals expected their lifestyle to be better in retirement, but due to Covid, this has now fallen to 27 per cent.

This year, 37 per cent of the survey’s 12,000 respondents believed their lifestyle would more or less stay the same, whereas 14 per cent believed it would get worse and 22 per cent remained uncertain.

Moira O’Neill, head of personal finance at Interactive Investor, said: “The Covid-19 pandemic has created uncertainty for everyone. 

“With jobs in jeopardy and incomes slashed, many are turning to their parents for help – whether it’s for a cash bailout, support to get on the property ladder or childcare. But the older generation is suffering too, with many having seen their savings rocked.”

Covid has also had a significant effect on people’s long-term plans, with many looking to delay their retirement because of the market downturns suffered due to the pandemic and lockdown.

Overall, 13 per cent of respondents who are yet to retire said they would have to delay and a third were unsure if they would be able to retire as originally planned.

The survey found that those closest to retirement age were the most affected, with one in five of those aged between 60 and 65 believing they will have to work for longer to make up for financial losses.

This compared with 19 per cent of those aged 66 to 71.

To make matters worse, many people are being forced to retire early due to the effects of covid on employers.

Data from the Office for National Statistics, published last week (October 13), found employment among over 65s was 1.28m in the three months to August, 122,000 less than in the first three months of the year, a fall of 9 per cent.

The pensions industry has previously warned that a record number of over-65s will be forced to take early retirement if employment continues to fall.

Steven Cameron, pensions director at Aegon said at the time: “In recent years we’ve seen an accelerating trend towards people transitioning into retirement, continuing to work after traditional retirement ages often on a part time basis. 

“For some, this is to remain active while for others, with gold plated final salary pensions largely a thing of the past, it’s a financial necessity. 

“Unfortunately, it looks like for many, what they’d hoped would be a gradual transition has turned into a sudden departure from work.”

A quarter of those choosing to delay retirement said, financially speaking, they would have to wait a year beyond their original plans before giving up work, while 34 per cent expected to wait an additional two years.

Worryingly, a quarter thought due to the investment losses suffered on their pensions due to the coronavirus market drops, they might never be able to fully retire.