The Aviva report – which has tracked personal finances among over-55s before, at and during retirement since 2010 – also shows an income dip and rising uncertainty over the economy in Q2 ahead of the UK’s vote on its European Union (EU) membership last month.
When asked whether they had started planning for retirement, just 36% of unretired over-55s had done so in Q2: the lowest percentage in two years since Aviva began tracking this. While 41% have thought about it but not taken any action, almost one in four (23%) have not even thought about it yet.
Asked to identify the most important personal choices or decisions they face to ensure a happy retirement, the most common response from unretired over-55s was making the most of their retirement finances so they have enough money to fund the remainder of their life (63%). This was more likely to be singled out as an important personal choice than maintaining their health once they retire (59%) and deciding whether to stay in their current home or move to a new property (31%).
Among those who have already retired in Q2 2016, one in four (25%) said budgeting their money has been the most difficult aspect of their retirement so far, making it their most common concern.
Mirroring over-55s’ general concerns about making their money last in retirement, 13% who are yet to retire feel more anxious about this as a direct result of the ‘pension freedoms’ launched in April 2015, up from 10% a year ago. There is also uncertainty about their options as a direct result of the new pension rules: just 12% feel their retirement plans might be affected by the extra flexibility offered by the pension freedoms, yet almost a third (32%) don’t know.
Alistair McQueen, Savings and Retirement Manager at Aviva, says: “The UK is entering uncharted territory after the EU referendum, but with relatively few unretired people beyond the age of 55 having started their retirement planning, it is important not to lose sight of long-term savings goals. Tracking attitudes to retirement finances since 2010 has helped Aviva understand and support consumers in the wake of the financial crisis, and our findings offer important lessons for times of uncertainty.
Deciding how to make the most of our finances so we have enough money to last in retirement, and then budgeting effectively, are consistently picked out as the most important challenges we face in later life. It means the importance of saving for the future remains one of life’s certainties.
Changing social, political and demographic factors mean that the outlook for retirement finances in the UK is constantly evolving. We will continue to monitor developments closely in order to understand and support consumers’ needs.”
