Two-thirds (66 per cent) of those retiring in 2021 are at risk of running out of pension savings in their retirement, according to research from Standard Life Aberdeen.
The research, which surveyed 2,000 UK adults who were either due to retire this year or had retired in the past 12 months, published today (April 21), found the class of 2021 planned to spend around £21,000 a year in retirement.
And although this is almost £10,000 less than the average household income of £29,900, many of them do not have an adequate level of savings to maintain this.
Based on this figure, a retiree would need about £390,000 in savings on top of their state pension income for a 30-year retirement.
But the average value of a class of 2021 pot is £366,000 with a third (33 per cent) admitting to having less than £100,000 saved.
John Tait, retirement advice specialist at Standard Life Aberdeen, said: “Vast numbers of those retiring this year risk running out of money in their retirement. Retirement is a marathon, not a sprint, and many could be going into it without sufficient preparation or planning.
“Pension pots are without a doubt the most popular option for funding retirement, but it’s so important that retirees consider any other savings or assets they can use when deciding whether they can afford to retire or not.”
The research also found that more than a third (37 per cent) of those planning to retire this year were worried about not having enough money to last throughout retirement.
Just 39 per cent felt very confident that they’re financially ready to stop working this year, with a third (34 per cent) of women feeling very confident versus two in five (43 per cent) men.
Meanwhile almost half (48 per cent) said they were planning to reduce their usual spending, while a quarter (27 per cent) plan to work part-time to help financially.
One in five (21 per cent) are planning to sell their home or to downsize.
Standard life Aberdeen said 37 per cent of those retiring in 2021 had actually accelerated their plans to step back from work in the past 12 months due to Covid-19.
Lockdown impacting retirement plans, health concerns due to the pandemic and career uncertainty were the three main reasons for speeding up retirement.
Ben Hampton, head of retirement advice at Standard Life Aberdeen, said: “Deciding how and when to retire is one of the biggest life decisions and transitions we make.
"Longer life expectancy, volatile investment markets and ever-changing regulation can make planning and preparing for retirement feel confusing, not to mention the impact of the coronavirus pandemic on people’s immediate and longer-term financial priorities and plans.
“Whatever the plan, when it comes to making the decision to retire, most people find it understandably daunting. Even more so if you don’t feel prepared.”
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