Money trumps personal and career passions for the over-55s

Article date: 9 October 2013

  • Financial security outweighs companionship – regardless of age, gender or income
  • Salaries more important than pursuing passions when changing career
  • Over-55s view paying off a mortgage as their best financial decision

Money trumps companionship when it comes to happiness in retirement, according to Aviva’s latest Real Retirement Report. Having enough money to live comfortably emerges as the single most important factor for over a quarter of over-55s (27%) – more so than sharing retirement with a partner (17%), a happy family life (12%) or devoting more time to hobbies and interests (3%).

The autumn 2013 edition of the report examines the financial pressures affecting the UK’s three ages of retirement – 55-64s (pre-retirees), 65-74s (the retiring) and over-75s (the long-term retired) – and explores the perspective they have gained on money matters. The findings show the over-55s value financial stability second only to good health (38%) in retirement.

A third of pre-retirees equate money with happiness

The importance of being able to afford to live comfortably in retirement transcends age, gender and income differences. It is the second most pressing priority after good health for both sexes and all three age groups over the age of 55 – regardless of their actual income.

Among over-55s with annual incomes of up to £15,000, almost three times as many place greater value on having enough money to live comfortably than sharing retirement with a partner (34.1% vs. 12.4%).  While the gap closes further up the income scale, even those receiving more than £30,000 annually put financial stability on a slightly higher pedestal than companionship (20.4% vs. 19.9%).

What is the most important ingredient
to a happy retirement?

All

Age bands

Annual income bands

55-64s

65-74s

Over-75s

<£15k

£15-30k

>£30k

Having enough money to live comfortably

27%

32%

22%

25%

34%

24%

20%

Sharing my retirement with a partner

17%

13%

20%

23%

12%

18%

20%

Being in good health

38%

38%

42%

31%

38%

39%

41%

Having a happy family life

12%

11%

10%

18%

10%

14%

13%

Being active socially

2%

2%

2%

1%

2%

1%

2%

Devoting time to hobbies  and interests

3%

3%

3%

0%

3%

3%

3%

Being able to support others financially

1%

1%

1%

1%

1%

0%

1%

A shared retirement becomes more important with age and is the main priority for 23% of over-75s compared with 13% of 55-64s. More of the younger demographic prioritise finances than any other age group (32%) – suggesting the recession and savings squeeze has increased the importance of money for those currently approaching retirement.

Money matters prompt career changes

Changing priorities during their working lives add to the impression that the over-55s are becoming more financially motivated. Just 15% say they chose their original or main career because of the salary, with men far more likely than women to have done so (19% vs. 10%).

In comparison, 27% of over-55s were inspired down a particular career path by a genuine passion for it (including 30% of men and 23% of women.)

However when it comes to changing career – a move made by 57% of over-55s – salary considerations surpass personal interests or passions as a primary motive (17% vs. 14%). Men are again more likely than women to have moved in pursuit of more money (20% vs. 14%).

Construction and property is the career path where salary features as the biggest motivation (29%). It is also the sector where a need for money is most likely to have prompted those who work in it to seek a change of career (29%).

Over-55s make the case for saving early and clearing mortgage debt

With hindsight, over-55s identify paying off a mortgage or buying their home outright as the best financial decision they have made: 60% have done and 96% of those are glad they did.

Taking a break from work to raise their family is the second best decision made, with 95% of those who have done (36% of over-55s) pleased with their choice in retrospect. Similarly, 94% of those who took out a workplace pension are glad they did.

Over-55s’ best financial decisions

% who did

Typical age for doing so

% who are glad they did

Paying off a mortgage/buying a house outright

60%

55-59

96%

Took a break from work to raise a family

36%

20-24

95%

Took out a workplace pension

63%

20-24

94%

When it comes to less prudent decision making, investing in the stock market qualifies as the most widely regretted choice. Nearly one in five over-55s have done (19%) – typically between the ages of 35 and 39 – and nearly a third of those regret it (29%).

One in twelve over-55s have emigrated at some point in their lives (8%) but over a quarter (27%) regret doing so, while among the 24% of over-55s who started their own business, nearly one in five (18%) now see this as a mistake.

Over-55s’ worst financial decisions

% who did

Typical age for doing so

% who regret it

Took risks with the stock market

19%

35-39

29%

Emigrated

8%

20-24

27%

Started their own business

24%

30-34

18%

On reflection, over-55s have a simple message about financial planning for retirement: save more on a monthly basis. Exactly half (50%) would give their younger self this advice, with 40% emphasising the importance of making better use of savings products such as Isas.

Another common theme is the importance of contributing earlier to a pension: 39% would recommend starting a personal pension earlier than they did (only 13% opened one before they were 30) while 38% say the same about workplace pensions (only 35% started one by the same age). 

Financial advice over-55s would give their younger selves

All

55-64s

65-74s

Over-75s

Save more on a monthly basis

50%

50%

52%

48%

Make better use of savings products e.g. Isas

40%

35%

48%

39%

Take out a workplace pension

39%

35%

46%

35%

Start contributing to a personal pension earlier

39%

32%

49%

33%

Start contributing to a workplace pension earlier

38%

33%

47%

35%

Take out a personal pension

35%

33%

40%

27%

Use a financial adviser to help plan ahead

15%

14%

16%

17%

Invest more in stocks, shares or bonds

10%

9%

9%

12%

 

Financial stability equals stress relief

More than half of over-55s see freedom from stress as the most important benefit of financial stability in later life (51%). More than one in five treasure the luxury of enjoying holidays or hobbies (21%), while twice as many over-55s value the financial clout to support themselves (18%) rather than the ability to support others (9%).

Among those whose lives have been impacted by financial worries (42%), almost half have had to sacrifice their original retirement plans such as travelling or holidays (48%). Almost one in five have had to continue working part-time as a direct result (16%) and a similar number have had to continue working full-time (15%).

This helps to explain why – for 15% of over-55s – financial pressures in retirement have made them more stressed than they were during their working lives.

Clive Bolton, managing director of Aviva’s At Retirement business, comments: “Some people may be tired of hearing about the importance of saving for retirement, but listening to those who know what it means to be retired in 2013 leaves little doubt that financial stability can in fact buy happiness, and certainly help towards a stress-free lifestyle.

“These findings suggest there is no magic recipe or secret formula that works better than regular saving and prudent decision making, whether that means taking steps towards paying off a mortgage or seizing opportunities to pay into pension schemes. The fact that over-55s are grateful for time spent raising their families shows that financial planning needn’t take over your life – but a bit of careful thought can be priceless in the long term.

“Clearly the pressure of living costs and economic difficulties mean some over-55s find themselves in a less than comfortable position and harbour regrets about the past as retirement looms. It is important to remember there is a range of financial choices open beyond the age of 55 that can work to steer their finances back on track and help deliver the stress-free retirement they aspire to.”

Download Aviva Real Retirement Report Autumn 2013 PDF (5 MB)

Methodology:

The Real Retirement Report was designed and produced by Wriglesworth Research.  As part of this more than 17,686 UK consumers aged over 55 were interviewed between February 2010 and October 2013.  This data was used to form the basis of the Aviva Real Retirement Report.  Wherever possible, the same data parameters have been used for analysis but some additions or changes have been made as other tracking topics become apparent.

- Ends –

If you are a journalist and would like further information, please contact:

Aviva Press Office: Tom Wilson: 01904 684 283 / 07800 692053 or tom.wilson@aviva.co.uk

The Wriglesworth Consultancy: Andy Lane / Sinead Meckin / Rachel Morrod 020 7427 1400 / aviva@wriglesworth.com

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