Research studying the retirement plans of the self-employed has found that the UK lags behind most of the world, with the highest number of people, 52%, who do not have a retirement plan.
The research carried out by Aegon in 15 countries across the Americas, Europe, Asia and Australia, found that when it comes to retirement, only 44% of the self-employed in the UK have a plan, compared to 60% globally. However, only one in 10 have considered it sufficiently to write it down.
Aegon says not formalising a plan makes it difficult for individuals to assess whether or not they’re on track for retirement and this has contributed to over half, 52%, projecting that they’ll still be working after they reach age 65. A lack of planning also impacts on their outlook, with only 20% confident they’ll have a comfortable lifestyle in retirement – highlighting the need for support and advice for the self-employed to help them plan.
Only 29% have a backup plan to provide them with an income in the event that they are unable to continue working before they reach their planned retirement.
The self-employed are also banking on a wide variety of sources for their retirement income with 49% relying on the state pension and 40% on their own savings.
Kate Smith, head of pensions at Aegon, said: “A growing trend towards self-employment represents not only a change in how 4.6 million people work in the UK, it also means changes in how people save and plan for retirement. Without employer-sponsored plans, the self-employed are flying solo when it comes to pensions. Achieving long term financial security and peace of mind in retirement requires a rigorous approach to saving and proper planning.
“The self-employed may have concerns about their ability to retire, but few are doing anything meaningful to address the issues. With all the day to day pressures involved in working for themselves, many find it difficult to make plans, but taking time to write a pension plan brings many benefits, not least making it immediately tangible.
“Writing down a retirement plan brings it to life, making it more likely they will act on it. It also allows them to refer back to it and share it with their partners, or even get input from others, including advisers – that’s difficult to achieve if it’s just in your head. If it’s not written down it’s only ever going to be a virtual plan and not a meaningful plan that can help keep you on track.”