3 million over-50s will leave planning retirement finances to final two years before stopping work
- Over a third of over-50s leave retirement finance planning late or won’t plan at all
- Half of those recently retired advise Gen X to start planning earlier
- 35% of retirees said they left planning to the last two years or didn’t plan at all
Over a third (37%) of over 50s are leaving their retirement financial plans until their final two years before retirement or won’t prepare at all, according to research from the Money and Pensions Service (MaPS).
This year will see the highest number of people in nearly two decades reaching pension freedom age with some 940,000 people turning 55.1 With the economic downturn and effects of Covid-19 impacting the finances of one in three 50-70 year olds, it is more important than ever to plan ahead.
Over a third (37%) of over 50s are leaving their retirement financial plans until their final two years before retirement or won’t prepare at all, according to research from the Money and Pensions Service (MaPS).
This year will see the highest number of people in nearly two decades reaching pension freedom age with some 940,000 people turning 55.1 With the economic downturn and effects of Covid-19 impacting the finances of one in three 50-70 year olds, it is more important than ever to plan ahead.
New research, which surveyed people aged 50-70 with pension savings, reveals that unretired people are not prepared for what’s to come.
- 69% have done either none, or very little, planning around retirement finances
- A mere 7% of over 50s feel fully prepared
- Over a quarter (27%) say they will only start planning their retirement finances with two years or less to go before retirement, equating to 3 million over-50’s planning late2
- 10% won’t plan their retirement finances at all
Recent retirees (those aged up to 70) are urging Gen X3 to use this phase of their lives to be better prepared, with over half of retirees agreeing that unretired over-50’s should start planning their retirement finances earlier. 44% say they should find out more about making the most of their pension money.
Recent retirees recommend five simple steps for Gen Xers to be better prepared than they were for retirement:
| Retirees’ top guidance to Gen X | |
| 1 | Save more towards your retirement (60%) |
| 2 | Start planning retirement finances earlier (56%) |
| 3 | Take time to decide on how you will access retirement savings (45%) |
| 4 | Find out more about making the most of your pension money (44%) |
| 5 | Seek guidance on how to best organise your retirement finances (41%) |
The research also reveals the Covid-19 pandemic has resulted in over a third (36%) of 50-70 year olds saying their finances have been impacted. Nearly one in five (18%) say they have decided to delay accessing their pension, while 14% are accessing it sooner – 10% to aid their own day-to-day finances and 4% to support a family member or friend.
Carolyn Jones, Head of Pensions Policy and Strategy at the Money and Pensions Service said:
“Given over a third of over-50s have had their finances affected by Covid-19 and we’re now facing a recession, we’re urging people not to delay or skip planning their retirement finances – whether you’re thinking of retiring later or bringing it forward. Your pension is likely to be one of the most valuable assets you hold so it’s really important to start planning early to make sure you make the best choices based on your circumstances. Getting help and talking through your options now could be the difference between having a comfortable retirement, or having to work for longer or adjust to living on a lower income.
“We know that taking pensions guidance works. People who have had an appointment with our Pension Wise specialists feel more confident, informed and prepared when it comes to how they will access their pension savings. In 2019/20, more than half of appointment customers said that getting guidance either changed how they accessed their pension, or how they intend to do so.4
“As well as offering our usual telephone appointments to provide that guidance, during Pensions Awareness Week we’ll be hosting a virtual drop-in session where any burning questions can be asked as well as general discussion about preparation.”
Daniela Wilson, Pensions Guider at Pension Wise said:
“I discuss pension options with the public every day and one of the most common worries is feeling unprepared when it comes to making decisions with pension providers.
“Chatting through the different options for as little as 45 minutes has made nine in 10 of our customers (92%) feel well prepared ahead of speaking to their providers.5 This small commitment of time to talk through options can help with general wellbeing as well as aiding decision making when it comes to accessing their pension pots.”
The Money and Pensions Service offers the following top tips on how to start planning retirement finances:
- Track down your pension pot(s) and check their value. With the average person having 11 jobs in their lifetime, it’s easy to lose track of any pensions you may have had in the past. If you think you’ve lost a workplace pension, the first port of call should be your former employer, or you can contact the provider if you remember the name. If you can’t find details of either, you can contact the government’s Pensions Tracing Service. Once you’ve tracked down your pots, you can check your statements or ask your scheme or provider for an up to date valuation of how much you have saved.
- Think about your living costs in retirement. Draw up a budget for your expected income and spending as early as possible to give yourself a greater sense of control over your situation. The Money Advice Service has a free budget planner tool to help you plot this out.
- Think about what age you’d like to retire and when you would want to access your pension savings. For some people, this may not necessarily be at the same time. Some people may have already chosen a retirement age with their provider, but if your circumstances have changed and you plan to retire earlier or later, you may wish to reconsider how your savings are being managed to ensure your money is working hard for you. It’s helpful to also check your retirement income using the Money Advice Service’s pension calculator if you’re going through any changes.
- Consider if your spouse or family need to be factored into your plans. If you wish to provide for family members with your pension savings, this could impact the choices available to you when it comes to accessing your money.
- Make a free Pension Wise appointment. Available to people aged 50 and over, specialist guiders will explain the pros and cons of the six different options for accessing your pension savings, tax implications, how to shop around to get the best deal and avoid pension scams. Telephone appointments are available on 0800 138 3944.
-ENDS-
For media enquiries contact:
MaPS Press Office 020 8132 5284 / media@maps.org.uk
Mia Cochrane, senior press officer 020 8132 4937 / mia.cochrane@maps.org.uk
Kindred Agency 020 70 10 0888/ moneyandpensions@kindredagency.com
Notes to editors
The research was conducted by Research Without Borders for the Money and Pensions Service. A nationally representative survey of 2,001 UK adults aged 50-70 was conducted from 28th – 31st August 2020.
- https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/populationestimatesforukenglandandwalesscotlandandnorthernireland (tab MYE2, BG6)
- There are over 16 million 50-70 year-olds in the UK (ONS), of which 74% have some form of pension savings besides the state pension, equating to around 12 million people. 27% of them, over 3 million individuals, are leaving planning their retirement finances to 2 years or less before retirement.
- Generation X is defined as anyone born between 1965 and 1980.
- Forthcoming Pension Wise 2019/2020 Service Evaluation Report
- Pension Wise Service Evaluation 2018/19: Experiences and outcomes of customers
About the Money and Pensions Service
The Money and Pensions Service (MaPS) vision is: ‘everyone making the most of their money and pensions.’
MaPS is an arm’s-length body sponsored by the Department for Work and Pensions (DWP), and it has a joint commitment to provide access to the information and guidance people across the UK need, to make effective financial decisions over their lifetime.
The organisation also engages with HM Treasury on policy matters relating to financial capability and debt advice.
MaPS brings together the free services previously delivered by the Money Advice Service, The Pensions Advisory Service and Pension Wise. MaPS offers customers guidance and appointments over the telephone, online and in person.
For further information visit the Money and Pensions Service website www.moneyandpensionsservice.org.uk
Consumers can continue to access free guidance about their money and pensions via the following websites and help lines:
www.moneyadviceservice.org.uk / 0800 138 7777