Aviva’s Autumn 2014 Real Retirement Report suggests things are getting better for the UK’s over-55s. Income – and with it, spending on life’s small luxuries – is edging upwards. There seems to be a mood of growing optimism when it comes to the economy.
But the Report also found that many over-55s still worry about making ends meet once they’ve retired. While 52% think they will have enough money in retirement, 7% say that they won’t. And a further 27% will only go as far as saying they may have enough.
What's in the Real Retirement Report?
The Autumn 2014 Real Retirement Report looks in detail at the finances of the over-55s and explores people’s views on running out of money, and how they feel the changes announced in the 2014 Budget will affect them.
Of course, things are changing fast in the world of pensions. From April 2015 you’ll have the chance to take your pension savings in any way you wish – including as cash – provided you’re aged 55 or over. But does this make you feel more or less confident that you won’t run out of money later in life?
It’s easy to see how the opportunity to take the whole pension fund in one go might prove too tempting for many people. Yet the Report shows that only 7% of over-55s say they are worried about spending their pension savings too early and then running out of money because of the new freedoms. Understandably perhaps, they’re more worried about issues such as ill health (56%) or going into a care home (30%). So spending their pension fund too early may not be something that many people are losing sleep over. But that’s not to say that it can’t happen.
Five ways to keep on top of your retirement planning
Aviva want to help people to address any fears about their finances when they retire. But even if – like many people – you haven’t been worrying too much about this issue, it’s still important to set yourself some clear objectives when you’re planning your retirement.
With this in mind, you might like to give some thought to these suggestions:
1 - Have a realistic view of how much money you will need to last you for the whole of your life
As you plan your retirement, you need to be clear about how much money you think you will need. Also, difficult as it may be, you should think about how long it may need to last you – many people are surprised at how life expectancy has increased. Being realistic about your financial needs into your later years, and how they could change, will help you budget accordingly and not over-spend.
2 - Get up to speed with the changes being introduced by the Government
Remember, from April 2015, over-55s will have far more freedom in how they can take their pension savings. You’ll find more about this here.
It’s important to understand what these changes mean for you personally. You might remember that the Government has pledged impartial guidance for everyone in a defined contribution pension scheme, to help with their choices. Take this guidance and choose carefully so that you have money to last the whole of your retirement.
3 - Take a balanced approach to your spending needs, particularly as the economy recovers
It’s tempting to take the brakes off your spending a little as things start to improve economically.
Having enough money to last the whole of your retirement is essential, so be clear about what you can afford to spend now. We all know that the economy and property prices can fall as well as rise, so it’s important to spend – and borrow – within your means and stick to your budget.
4 - Continue to save
Many over-55s are still working either full-time or part-time and should consider continuing to put money away for the future. Maintaining a savings habit into retirement is as important as it was when you were younger.
5 - Get some more help from Aviva
There’s plenty of helpful information and guidance at I'm approaching retirement – including a simple online calculator, My retirement planner, which can help you get some idea what your income in retirement might be.
You can also watch a video. Aviva retirement expert John Lawson goes through some of the most important things to consider when you’re aiming to enjoy ta good lifestyle once you’ve retired.