- Over half (52%) avoid thinking about being older in retirement
- Three-quarters (73%) have done little or no planning for their retirement finances
- A third (34%) prefer to live for today than plan for tomorrow
- However, planning can have a significant impact: planners expect retirement finances to last for 19 years vs. just 11 years for non-planners
Almost two thirds (62%) of UK adults admit they focus on the early, active stages when thinking about retirement, according to new insights from Standard Life, part of Phoenix Group, the largest long-term savings and retirement business in the UK.
Over half (52%) confess they simply avoid thinking about being older in retirement when they might be less mobile or in poorer health. However, focussing on the earlier part of retirement, when people tend to be in better health, could mean retirees face a financial shortfall in later life, with funds unable to meet all their needs.
The findings are contained in Standard Life’s study Bringing Retirement into focus which looks to understand the attitudes, hopes and behaviours of people as they manage their finances to and through retirement. The research was conducted among almost 5,000 consumers nation-wide across the UK, aged 18 to 91.
Coming up short
Those who are not yet retired think they will be able to support their lifestyle until the age of 84, while those already in retirement expect to support themselves until 81. However, the latest figures show that more than 600,000 people are aged 90 over2, highlighting the challenge that people may face in making their savings stretch.
Jenny Holt, Managing Director, Customer Savings & Investments at Standard Life, part of Phoenix Group, comments: “I think it’s natural that the vast majority of people focus on the early retirement years, when they tend to be more active and in better health, and delay thinking about the later stages when they may be inactive or require care.
“It’s not easy to think about times in our lives when we might not be active or independent, however, this could leave a financial hole in later life, especially as we are living for longer and the time we spend in retirement is subsequently increasing.
“As we move away from defined benefit to defined contribution pensions, underestimating or not thinking about finances for the full duration of retirement could have a detrimental impact. It’s therefore crucial that people feel informed and engage with their retirement finances so they can have a financial future that lasts the full length of retirement.”
The reality for older retirees is also underlined in the DWP’s ‘Pensioners’ Incomes Series: financial year 2020 to 2021, which found that pensioner households with a head under 75 year of age have higher average incomes than those where the head was 75 or over.
The importance of a plan
Three-quarters (73%) say they have done little or no planning around the amount of money needed to live on in retirement, while nearly three in ten (28%) admitting they never review their long-term finances to check how things are progressing. A third (34%) also stated they preferred to live for today than plan for tomorrow.
However, Standard Life’s research shows that planning can have a significant impact, with those who have planned for the future expecting their funds to support them for 19 years, compared to just 11 years for those who have not done any planning.
Jenny Holt, Managing Director, Customer Savings & Investments at Standard Life, part of Phoenix Group, continues: “We don’t know when the inactive phase of retirement might begin, and it can be a difficult thing to think about, but it’s essential that we do. Having a plan in place brings peace of mind and can improve quality of life, and it’s important to be realistic about the duration of retirement, from the active stages to the less active ones.
“We have been working with the Pensions and Lifetime Savings Association (PLSA) to incorporate its ‘Retirement Living Standards’ into our Retirement Income tool which shows people whether they are on track for a Comfortable, Moderate, Minimum income in retirement which can potentially help address this question over how long people might expect their savings to last.”