The idea of retirement planning is not something today’s young people associate themselves with; for them, the priorities in life include climbing the career ladder, purchasing a home, starting a family, holidays and luxurious items – in all, to enjoy life while they are young.
According to a latest report by NFU Mutual, it’s not until the age of 48 that people start to consider when they will retire and how much income they would need during retirement.
The findings from the report are in line with the views of most pension experts; for many people who wait till 48 to worry about their pensions and start investing in a retirement plan it’s usually too late, unless they plan to save a majority of their future income for their retirement.
The report also found that people realize too late just how much they would need for a comfortable retirement and when they will realistically be able to retire from work. If you begin to save at 48, your retirement pot may not have enough years to mature into a sizable amount to outlast a comfortable retirement. People who start saving in their twenties will end up with a much bigger pension pot than people who start saving in their forties.
The report also revealed how people are unrealistic about the age at which they will be able to retire. Many people in their forties and fifties will have to push back their retirement plans by more than four years as they re-evaluate a realistic retirement age for themselves. When asked about their expected retirement age, many 55 to 64 year olds said they will retire at 65. Interestingly, these people about a decade ago had thought they will be retiring at 61.
The consequences of the retirement reality have been dramatic for some. One in ten people still working past the age of 55 expressed fears they might never be able to fully retire from work. Many regretted not saving for retirement early in life. Official figures indicate a greater lack of pension saving among women, forcing them to work longer than many would like to work.
The Government is trying to solve Britain’s pension crisis by making it mandatory for companies to pay into their workers’ pension. As per the workplace pension enrollment, anyone between the age of 22 and the State Pension Age earning more than £9,440 annually will be signed up for the pension. The rules were introduced in October, and already 1.7 million people have been automatically enrolled.