Two in three retirees ‘will run out of money’
More than a third will accelerate retirement plans
Two-thirds (66%) of those retiring in 2021 will exhaust their pension savings before they die, according to research by Standard Life Aberdeen.
Lockdown and worries over the pandemic and job security have persuaded more people to accelerate their retirement plans which may leave them short of funds.
It found that more than a third (37% ) of those close to retirement have chosen to leave their job early.
The findings are from the fund house’s inaugural ‘Class of’ report which surveyed 2,000 adults who are due to retire in the next 12 months.
Although they plan to spend less a year in retirement than they currently do (on average £21,000 against £29,000 respectively), a lack of savings has been identified as problem.
Based on this £21,000 figure, a retiree would need savings of around £390,000 on top of their state pension for a 30-year retirement.
But the average pension pot for the Class of 2021 is £366,000 with a third (33%) admitting to having less than £100,000 saved away.
Standard Life Aberdeen retirement advice specialist John Tait said: “Vast numbers of those retiring this year risk running out of money in their retirement. Retirement is a marathon, not a sprint, and many could be going into it without sufficient preparation or planning.
“Pension pots are without a doubt the most popular option for funding retirement, but it’s so important that retirees consider any other savings or assets they can use when deciding whether they can afford to retire or not.”
Women who are close to retirement were less likely to feel confident they are financially ready to finish working than men.
The report found a third (34%) of women were feeling very confident financially about finishing work against two in five (43%) men.
The survey also found people had apprehensions about retiring during a pandemic.
More than half (51%) were worried about not being able to do things they planned, while two-fifths (43%) were concerned they would not be able to see friends and family.