37% of economically active over-55s still haven’t made plans for their finances in retirement, according to Aviva’s latest Real Retirement Report.
The eighth quarterly Report reveals evidence which Aviva says runs contrary to the accepted wisdom that says people become more financially organised in the final years before retirement. The figures show the typical over-55 only starts to actively think about their retirement income at age 48, but it takes another four years (age 52) before they start to worry or think seriously about it.
The main reasons given for this failure to prepare are: a lack of money (47%), being hampered by family commitments (19%), and being too busy to think about it (8%). The financial implications of this can be serious, with 67% of 65-74 year-olds also saying that failing to prepare financially for retirement is their biggest regret.
The research found that ‘grey inflation’ has risen to 5.4% in the last year, which has caused the average savings pot to fall 27% over the last year from £15,262 (December 2010) to £11,153 currently. At the same time average incomes for the over-55s have fallen 4% from £1,335 to £1,285 over the same period.
The report found the typical person approaching retirement (55-64 years-old) has a smaller savings pot (£6,665), bigger debts (£79,598), and saves less each month (£28.06) than those aged over-75, whereas one year ago this trend was reversed.
While 37% of economically active over-55s have yet to make any practical preparation for retirement such as researching the potential size of their assets or how best to invest them, the latest Real Retirement Report finds 39% say they have worked out how much income they will receive from their pensions/investments. In addition, 25% have discussed the financial and emotional implications of retirement with their partner, 23% have started to research pension/annuity options, 22% are looking to pay off any unsecured borrowing as quickly as possible, and 15% have spoken to a financial adviser about their finances.
As a consequence of their financial situation, more of today’s over-55s are likely to end up having to work for longer. Following the end to the Default Retirement Age in October 2011, which means people can no longer be forced to retire by their employers, the report found 61% of over-55s say changes to their financial, employment, or personal circumstances could now see them working longer.
26% of over-55s say they would keep working if they could find a job they could do when they are older, 18% would stay on with their current employer if they were offered flexible/part-time work, and 13% would carry on with the same job if their employer asked them to. Just 39% are resolute about the date they plan to retire.
Clive Bolton, ‘at retirement’ director at Aviva, said: “Everyone has seen their financial situation impacted over the last couple of years
