Article date: 2 July 2010
New research from Aviva reveals how the Babyboomer generation could disrupt the typical view of retirement. Reluctant to hang up their hats, they intend to travel the world, enhance their social lives and improve their health and fitness. But despite their ambitious and positive outlook, the reality of their financial situation might provide a rude awakening.
The Aviva research reveals:
- 43% of retirees see retirement as the start of a new, exciting stage of life
- 23% would like to be using the time to travel the world
- 49% want to spend more time on hobbies with 60% hoping to generate an income from them
- 62% plan to get into shape in order to enjoy a longer, healthier retirement.
Babyboomers as a generation have generally experienced rising property prices, enjoyed the benefits of the National Health Service and have been able to secure state pensions. And as a result of living through continued boom periods, they could be entering retirement healthier, more energetic and adventurous than previous retirees.
However, Aviva’s research worryingly reveals the difference between reality and fantasy when it comes to retirement finances. Over half of over 55s who currently earn £20k - £30k have saved less than £30k for their retirement. This translates to an income of around £165 per month. Yet despite this, almost a quarter of people (23%) in this category anticipate a retirement they describe as "comfortable", demonstrating a dramatic difference between what they are used to and what they might actually afford.
Potentially unaware of a shortfall in finances, retiring Babyboomers have set their sights on adventures. Almost half (43%) see the landmark as a chance to try out new opportunities and experiences. Globe-trotting is high on "to do" lists with nearly one in four (23%) planning to jet off to foreign shores. However, this may change for many as the reality of their pension pot becomes clear.
For those who prefer to stay on home soil however, their days could be financially fruitful. Almost half (49%) of retirees will be spending more time on hobbies, with over 60% of over 55s hoping this will make them additional money. Typically associated with an entrepreneurial generation, Babyboomers will continue to challenge themselves, utilising skills acquired during their working life to generate income into retirement.
And socialising remains high on the agenda as Babyboomers choose to use retirement to spend more time (and possibly money) with friends and family. Nearly half (48%) of over 55s plan to spend more time with their loved ones, and are likely to become inexpensive - or even free -babysitters for their grandchildren.
62% of Babyboomers intend to stay young, fit and active in their retirement by maintaining or improving their attitudes to health and exercise.
Clive Bolton, "at retirement" director for Aviva said: “Babyboomers have enjoyed certain benefits such as rising house prices and final salary pension schemes, but unfortunately many may still struggle to fund the retirement lifestyles they desire. In the run up to retirement, people should think about how they want to spend their days, and in reality, how much this will cost. Regardless of what pension pots people have, turning them into a viable income is vital, so shopping around for an annuity is an important next step.
“This research also opens up an interesting debate around who should fund retirement. If babyboomers are unprepared, there may be an expectation for younger generations to foot the bill in one way or another. This issue is particularly relevant in the current environment. In order to move forward, people in this country need to decide collectively what is a fair balance between paying for their own welfare, and relying on the wealth created by future generations."
Aviva has launched a Retirement Income Calculator to provide people with an accurate forecast of their expected income in retirement. It also offers advice for people who may discover their pension pot is smaller than expected. To find out more visit www.aviva.co.uk/annuities.
Aviva Press Office
Sarah Poulter, Media Relations Manager
01904 452828 / 07800 691569
Jo Roberts, Account Manager
020 7360 7804
Imogen Dunn, Account Executive
020 7360 7878
Notes to editors:
All figures, unless otherwise stated, are from YouGov Plc from a survey of 874 adults aged within the Baby Boomer generation, 45–64. Fieldwork was undertaken 14-17 May 2010. The survey was carried out online.
- Aviva is the world’s fifth largest* insurance group, serving 53 million customers across Europe, North America and Asia Pacific.
- Aviva's main business activities are long-term savings, fund management and general insurance, with worldwide total sales of £45.1 billion and funds under management of £379 billion at 31 December 2009.
- We are the largest insurance services provider in the UK and one of the leading providers of life and pensions products in Europe.
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* based on gross worldwide premiums at 31 December 2008
** Source: ABI data released May 2010