37% of savers concerned about pension adequacy

Nearly two-fifths (37 per cent) of people retiring this year are concerned they will not have enough money to fund their retirement, although 39 per cent of those planning to retire feel “very confident” that they are financially ready, according to research from Abrdn.

As reported by our sister title, Pensions Age, the findings suggested that financial ability may be more of a concern amongst women, as just under a third (34 per cent) of women were feeling very confident that they are financially ready to retire, compared to more than two-fifths (43 per cent) of men.

The research also found that nearly half (48 per cent) of 2021 retirees plan to reduce their spending habits in order to support themselves through retirement, while around 27 per cent expect to continue to work part time, and 21 per cent plan to sell their property or downsize.

A similar trend was also seen in recent research from Fidelity International, which revealed that just over a fifth (21 per cent) of savers intend to 'phase into' retirement, primarily due to concerns over whether their pension will be sufficient.

Despite concerns over financial preparedness, however, Abrdn found that 96 per cent of the 2021 retirees are emotionally ready to retire, with 76 per cent looking forward to the freedom of having their own schedule, 56 per cent looking forward to not having to work, and 55 per cent wanting to spend more time with friends and family.

It also found that almost two-fifths (39 per cent) of soon-to-be-retirees said had sought financial advice specifically for their retirement, while the majority (55 per cent) had researched options online, 30 per cent had asked friends and family, and 23 per cent had turned to tho their employer.

Commenting on the findings, Abrdn retirement advice specialist, Ben Hampton, said: “With retirement potentially lasting 30 years or more, it’s vital that people are fully aware of how they’re going to make their money last.

“After the last few years, we think initiatives like Pensions Awareness Week are more important than ever for people to get back on track with retirement plans after so much upheaval in other parts of their lives.

“Being aware of how much you will need to meet your retirement goals, how much you can afford to spend and how this could change as the years go on, as well as considering how to piece together different types of income options, can be daunting. This is why preparation is key.

“The government’s health and social care levy announcement adds a new element to the retirement planning puzzle. If you decide to work part time through retirement, especially after state pension age, you’ve got a new dynamic in the mix. Speaking to an expert will help you plan so you can take full advantage of the options available to you.”

He also identified emotional preparedness as a "vital factor" to consider when it comes to retirement, stating that it "plays a huge part in the financial considerations" and "undoubtedly influences what the financial profile of your retirement will look like".

“The big lifestyle changes that retirement transition brings can be unsettling, and particularly so if you don’t have a plan in place," he added.

"A well-developed retirement strategy will help give you the confidence that everything is in place to help deliver the retirement that you want.”

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