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Home Finance Retirement confidence dips as 40% say they can’t afford to stop work

Retirement confidence dips as 40% say they can’t afford to stop work

by Uma
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  • Almost four in ten (39%) people said they were not confident they could afford to retire.
  • This compares to just over one-third (34%) the previous year.
  • A further quarter (26%) said they were unsure.
  • Men were much more likely (44%) to say they were confident. This compares to just 26% of women.
  • Rising costs risk undermining peoples’ retirement planning leading to people needing to work longer and even return to work having already retired.

Survey of 1500 people conducted by Opinium on behalf of HL in September 2022

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“The cost-of-living crisis continues to wreak havoc on our finances with people feeling less confident about their ability to retire. According to a recent survey, almost four in ten people said they were not confident they could afford to retire -this compares to just over one-third just a year before. There’s a solid third of people who remain confident in their ability to retire over the past year -these could be people with some level of DB pension or other assets that give them some degree of certainty as to their long-term income. The real shift has come from people who were unsure if they had enough to retire who now seem to know they definitely don’t as their costs rise and their investments took a pounding. 

Looking a little closer at peoples’ goals, only a quarter (27%) of those surveyed thought it was realistic to think they wouldn’t have to worry about money in retirement and just over four in ten (41%) thought having enough in savings to cover emergencies was a realistic goal. Obviously, the younger you are then the more time you have to boost your pension contributions to make up any potential shortfalls, but for those coming up to retirement age the prospects look bleak.

This is the key reason why we are seeing signs of an “unretirement”, where people who have previously retired are now looking to make a return to the workforce. Many believed they had enough set aside to see them through retirement, but the enormous hike in the costs of essentials such as fuel and food is making many revisit their plans. Data released by the Office for National Statistics in December showed money is an important motivation to return to work, with 69% of 50–54year-olds citing it as a motivation. This compares to 62% of 55–59-year-olds and 59% of 60–65-year-olds. Though we expect inflation to start falling this year, it is likely to remain a squeeze on peoples plans for the foreseeable future.”

Be as prepared as possible for retirement

  1. Make sure you get what you are entitled to from your state pension.

The new state pension is set to be worth more than £10,000 per year from April, but many people don’t get the full amount. This can be because they spent time out of the workforce caring for family or were overseas. Check your state pension entitlement by going online at Check your State Pension forecast – GOV.UK (www.gov.uk) which will show any gaps in your National Insurance contribution history. You can buy voluntary National Insurance contributions to fill these gaps, but it is important to check with DWP first whether this is the right approach. Instead, you may be able to backdate a claim for a benefit that would qualify you for an automatic NI credit without having to hand over any money. Also, check with DWP that you actually will benefit from paying for voluntary credits as you may not if you were contracted out at any point during your career.

2.Do you need to claim your state pension if you are working?

If you can afford it, you can delay or even stop claiming your state pension for a while while you are working. This will give you a boosted state pension for when you do decide to stop work. You can only stop claiming state pension once and you need to get in contact with DWP to let them know from what date you want to stop claiming. This cannot be a date in the past or more than four weeks in the future.

3,Do you need to take an income from your workplace pension?

If you can afford to take less income or stop taking an income from your workplace pension while you are working, then this can give your pension more time to grow. Many people automatically access their pension as soon as they are able but if you don’t need to take it then it can be left. Even taking less income can be helpful in boosting your pot.

4.Keep track of your pensions

We work for several different employers during our working lives and the chances are you may have lost track of a pension that you had with them. It’s a huge issue with work from the Pensions Policy Institute estimating there is around £26bn worth of lost pension money washing around the system, with the typical lost pension totalling more than £9,000. This could have a massive impact on your financial prospects in retirement, so if you think you may have lost track of a pension it’s worth getting in contact with the government’s Pension Tracing Service Find pension contact details – GOV.UK (www.gov.uk). If you can remember the name of your employer or the pension provider, then this service can give you contact details for them.