Nearly two-thirds of UK adults or 62 per cent admit to focusing on the early, active stages when thinking about retirement, according to new insights from Standard Life, part of Phoenix Group.
Over half or 52 per cent admit to avoiding thinking about getting older in retirement, when they may be less mobile or in poorer health. Focusing on the early stages of retirement, when people are generally in better health, may result in retirees facing a financial shortfall later in life, with funds insufficient to meet all of their needs.
The findings are part of Standard Life’s Bringing Retirement into Focus project, which aims to better understand people’s attitudes as they prepare for and enter retirement. The study polled nearly 5,000 consumers, ranging in age from 18 to 91, across the UK.
Those who have not yet retired believe they will be able to support themselves until the age of 84, while those who have already retired believe they will be able to support themselves until the age of 81. But the newest statistics reveal that over 600,000 people are above the age of 90, illustrating the difficulty that people may have in stretching their funds Standard Life says.
Three-quarters of respondents or 73 per cent say they have done little or no planning for the amount of money they will need in retirement, while almost 28 per cent say they never assess their long-term finances to see how they are doing. A third of respondents or 34 per cent said they would rather live in the moment than plan for the future.
According to Standard Life’s research, individuals who have planned for the future expect their funds to support them for 19 years, compared to only 11 years for those who have not.
Standard Life, part of Phoenix Group customer savings & investments managing director Jenny Holt says: “I think it’s natural that the vast majority of people focus on the early retirement years when they tend to be more active and in better health and delay thinking about the later stages when they may be inactive or require care. It’s not easy to think about times in our lives when we might not be active or independent, however, this could leave a financial hole in later life, especially as we are living for longer and the time we spend in retirement is subsequently increasing.
“As we move away from defined benefit to defined contribution pensions, underestimating or not thinking about finances for the full duration of retirement could have a detrimental impact. It’s therefore crucial that people feel informed and engage with their retirement finances so they can have a financial future that lasts the full length of retirement.”
Holt adds: “We don’t know when the inactive phase of retirement might begin, and it can be a difficult thing to think about, but it’s essential that we do. Having a plan in place brings peace of mind and can improve quality of life, and it’s important to be realistic about the duration of retirement, from the active stages to the less active ones.
“We have been working with the Pensions and Lifetime Savings Association (PLSA) to incorporate its ‘Retirement Living Standards’ into our Retirement Income tool which shows people whether they are on track for a Comfortable, Moderate, Minimum income in retirement which can potentially help address this question over how long people might expect their savings to last.”
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