Third of people close to retirement ‘have accelerated plans due to coronavirus’

More than a third (37%) of people who are close to retirement have accelerated their plans due to the coronavirus pandemic, a report has found.

Lockdowns, health worries due to the pandemic and job uncertainty were the three main reasons for speeding up retirement, Standard Life Aberdeen found.

Women who are close to retirement were less likely to feel confident they are financially ready to finish working than men.

The report found a third (34%) of women were feeling very confident financially about finishing work versus two in five (43%) men.

The research was included in Standard Life Aberdeen’s “class of 2021” report, which also found that more than a third (37%) of those planning to retire this year were worried about not having enough money to last throughout retirement.

2021 retirees plan to spend, on average, £21,000 a year in retirement.

The average value of a class of 2021 pension pot was £366,000 – but a third (33%) of those surveyed had less than £100,000 saved.

John Tait, retirement advice specialist at Standard Life Aberdeen, said: “Vast numbers of those retiring this year risk running out of money in their retirement. Retirement is a marathon, not a sprint, and many could be going into it without sufficient preparation or planning.

“Pension pots are without a doubt the most popular option for funding retirement, but it’s so important that retirees consider any other savings or assets they can use when deciding whether they can afford to retire or not.”

Nearly half (48%) of those surveyed were planning to reduce their usual spending to support themselves in retirement, while a quarter (27%) plan to work part-time to help financially. One in five (21%) were planning to sell their home or downsize to fund retirement.

The report also found people had apprehensions about retiring during a pandemic.

More than half (51%) were worried about not being able to do things they planned, while two-fifths (43%) were concerned they would not be able to see friends and family.

Three in 10 (29%) had concerns about their pension falling in volatile markets, and nearly a fifth (17%) had seen their income fall over the past year.

Ben Hampton, head of retirement advice at Standard Life Aberdeen, said: “We hope the findings from our research help to inspire tomorrow’s generation of retirees, igniting a spark in them to create a plan they can have confidence in for their retirement.”

Some 2,000 UK adults who were either due to retire in the next 12 months, or had retired in the past 12 months were surveyed in February 2021.

Helen Morrissey, pension specialist at Royal London, said: “The pandemic has caused so much uncertainty with some people deciding to retire sooner than they otherwise would have. While some people will be able to plug gaps in their retirement income by working part time, others will not be able to do so and may have to make cutbacks to make their money last.

“Wherever possible people coming up to retirement should speak to a financial adviser about their options. An adviser can take a holistic view of someone’s entire financial set up and help them to build a plan that lasts them throughout their retirement.”