‘Woefully underprepared for retirement’ Figures show Brits are not saving enough

Alastair Stewart sends warning about future of pensions

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A study by money.co.uk investigated Britons’ understanding of pensions and found that the majority had no idea what payments they would be entitled to when they retire.

When asked how they were planning to pay for their retirement – one in 10 said they plan to – or already do – work a second job to help in later life.

And, although some people would relish the chance to keep busy, others will need to plan now if they’d prefer the chance to take it a little bit easier.

Salman Haqqi, Personal Finance Editor at money.co.uk said Britons are woefully underprepared for retirement.

“A pension is a vitally important tool for helping provide a stable income in later life,” Mr Haqqi said.

“Once people retire, this often forms the majority of their income, so the nine in 10 people who were unsure about their future may want to re-familiarise themselves with the systems, as well as the location of their pension pots and log in details, to avoid any potential issues that could arise in the future.

“The basic state pension payment is £137.60 per week, with this amount rising to £179.60 for younger workers, as outlined on the Government’s website.

“However, 25 percent of Brits are missing out on potential further payments in the future as they have opted out from additional personal or workplace pensions.

“It is certainly worth assessing your options to provide the right balance between having enough disposable income now, and ensuring financial security in the future.”

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The study also asked respondents how they were planning to finance their retirement.

Traditional methods such as making use of savings accounts (38 percent) and investing in stocks and shares (15 percent) were among the most popular answers.

However, one in 10 said they would continue working past retirement age.

Although the study didn’t ask them what they planned on doing as a second job, attractive side hustles for pensioners include pet sitting, freelancing or running a business in what they are already skilled at, product testing and conducting online surveys.

Meanwhile, independent consumer champion Which? said that many people overestimate how much they’ll need to live on in retirement.

They could live on a lot less compared to their wages as they’ll have less overheads to pay as many will be mortgage free and children will have left home.

That said, it’s advisable to start saving and investing early to build up a sizable pension pot.

Another option is to downsize and use the equity from their family home to fund a part of retirement.

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Some experts say there are four key ‘secrets’ to a happy retirement. These are:

  • Start saving now – Saving money can make you feel happier, according to researcher Elizabeth Dunn
  • Focus on paying off your mortgage – Dunn also recommends overpaying your mortgage as this leaves people as much as four times happier
  • Spend money on what makes you happy – it might not be the same as when you were working says Michael Finke, a professor of wealth management at The American College of Financial Services
  • Have multiple income streams – having more than one income stream is a key to happiness in retirement, Wes Moss advises.

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