Half of over 55s are not prepared for retirement
New research from Close Brothers reveals that nearly half (46%) UK workers aged 55 and over do not feel prepared for their retirement.
The Close Brothers Financial Wellbeing Index, developed in conjunction with renowned corporate wellbeing expert Professor Sir Cary Cooper, reveals that this lack of preparation for retirement is causing significant concern to employees. Almost a third (31%) admit that funding their retirement is one of their top three money worries. This figure rises to 45% of those approaching retirement (55+). Comparably, the figure is a third (35%) among workers mid-career and just 19% among millennials. This is having a significant impact on the level of overall financial wellbeing.
Gender is also a notable factor when it comes to feeling unprepared for retirement. Women are struggling significantly more than their male counterparts, with around three quarters of women (74%) saying they don’t feel prepared for retirement compared to just half (54%) of men. To make matters worse, 41% of women feel unconfident they will be able to retire at the age they want to, versus 23% of men.
This lack of preparation is visible across the generations too. Only two in five millennials (38%) are confident that they will be able to achieve their long-term savings goals. This figure is even lower among those mid-career (34%).
Looking to the future, around a third (32%) of those approaching retirement believe that they will need to work in retirement to supplement their income compared to one in five (20%) millennials. Moreover, 16% of all employees expect to rely on inheritance to supply their retirement fund, while a further 15% will rely on downsizing their home.
To a large extent and dependant on their career stage, most employees can improve their prospects at retirement with better financial planning. However, more than half of UK employees (55%) say they don’t have a financial plan to achieve their future goals. This figure rises to 59% for those aged 55 and over. This is exacerbated by a lack of engagement in later life finances. A third (33%) of those over 55 admit that they never check on the amount in their pension pot.
Jeanette Makings, Head of Financial Education at Close Brothers said:
”It is worrying that so many employees approaching retirement feel anxious and unprepared. This not only impacts their own financial health but also has a knock on effect on the workplace, with people deferring retirement, increased people costs and blocked succession pathways. To support individuals in feeling able to retire when they want, organisations can engage all staff with planning for retirement throughout their career, and not just in the final countdown years.
“With pension freedoms and reduced lifetime and annual allowances, pensions are no longer the only solution to save for a secure retirement, but they are still the bedrock and most significant option for most employees. It’s imperative that employees understand their pension and the importance of saving for retirement throughout their life not just when approaching retirement. Regular monitoring, education, and engagement helps develop the necessary tools to take control, as well as helping guide them to make informed choices to suit their savings needs. This is just as vital for employees joining their first workplace, as it is to those at the point of retirement.
Professor Sir Cary Cooper, a leading expert in workplace wellbeing, ALLIANCE Manchester Business School, University of Manchester said:
“The report has produced astonishing findings, and it is absolutely necessary for employees to start planning for their retirement early. Reviewing how much you are saving into your pension a few times a year can go a long way. When you keep track and know how much you are putting away, you can make necessary changes where needed and feel more relaxed and confident about approaching retirement.
“Going forward, we all need to think about the ageing population in the UK. We are living longer and must consider the extra money that will be required to fund a longer retirement, as well as the additional costs of social care. We must think ahead and engage with our retirement plans now, to worry less later and enjoy a comfortable retirement.”