Most workers approaching retirement have a cosy expectation of easing up in their 50s before stopping work in their early 60s, but have no idea about how they will fund their dreams.
These unrealistic expectations of semi-retirement unsupported by sensible financial planning are dashing the hopes of millions and the time has come from everyone to take more responsibility for their old age, says a study by HSBC Bank.
The generation approaching retirement knows they will outlive previous generations and realise their pensions are less likely to be as generous as those paid in the past.
Despite this understanding, 68% of people approaching retirement worry about money and 48% have concerns they do not have enough cash for their retirement.
Nevertheless, only 39% have a financial plan for their old age.
Emotional investment
The bank found retirement savers can give up work knowing they have four times as much money set aside as their peers and can look forward to a fuller and happier life after work.
Savers with financial plans put by an average £123,000 for retirement, while non-planners have around £28,000.
Retirement planning proved to be an emotional investment as well.
Around half (48%) of non-savers expect financial hardship in retirement, while just a quarter of savers (23%) have similar worries.
Relying on state pension
The average age people give up work is 62 – but just one in four (27%) expect to be better off financially that their parents were in retirement, while half (49%) expect to be worse off.
Worringly, a fifth (17%) do not know where they will find money after they retire and 21% will rely on the state pension.
David Wells, head of investments, pensions and savings, HSBC Bank, said: “The emergence of this ostrich generation is a real concern. People know that they need to plan and save more for their retirement, yet are not turning this knowledge into action.
“People need to look around and take proper stock of what they need to do – they can no longer totally rely on the state or their employer to provide for them. It is all about taking individual responsibility.”
Many of these retirees that own their own homes outright or with small mortgages will be forced to use equity release during their retirement to keep income levels sustainable.
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