If you’re not prepared well before you reach retirement age, you may find yourself relying on outside factors to be financially stable in your golden years. So are you ready to retire or are you playing a game of retirement roulette?
This does not constitute advice and advice should be sought in all instances before acting on it.
Downsizing, inheritance and even lottery wins are part of people’s retirement plans these days!
According to Aviva’s latest Real Retirement Report, 25% of workers over 50 years old are counting on using the profits gained from downsizing and/or relocating their home to supplement income after they cease working.
Nearly as many people, 24% of over 50s workers, are planning to use an inheritance to help them through retirement.
Shockingly, a whopping 13% are hoping for a lottery win to help sustain their retirement goals!
It’s worth noting that a quarter of survey respondents report their planned reliance on external factors like downsizing or an inheritance, and a number of people are even holding out hope for a rare lottery win to afford a comfortable retirement lifestyle.
Which means dependence on family for financial matters transcends generations. Here’s a few things to keep in mind to prevent you from gambling on your future.
Savings window
It appears there’s a period of time where pension contributions and retirement savings can peak. Over 50s workers divulged that from around age 51 for approximately 5.5 years, they earned the highest income in their whole career.
This period of heightened earnings presents the perfect opportunity to kick your retirement savings into high gear. Unfortunately, not many workers take advantage of this phase, with just 12% committing to increasing, or have already increased their workplace pension contributions.
A measly extra 2% of workers just two years shy of retirement plan to join those efforts. So take a proactive role in saving for retirement and build a plan with your financial adviser that incorporates this prime savings window into your long-term financial planning.
Trying times
In the Aviva study, workers responded that a major spanner in the works when it comes to retirement savings is their current financial situation. One third of over 50s workers blame their inability to save on the fact that their current expenses leave little to do so.
After taking into consideration their cost of living and other incidentals like paying off mortgages before retiring or providing for financially dependent children, there’s much to be desired when it comes to savings contributions.
Future isn’t the focus
Since many workers feel like their current income doesn’t allow them a surplus of funds to invest in their future, it’s no surprise that 22% (2.2 million people) state they are preoccupied with short-term financial issues.
But not thinking about long-term consequences means they have a chance of running out of money during retirement.
These individuals have yet to seriously put money toward their savings, nor have 41% of respondents even worked out exactly how much they should be saving for retirement.
58% of workers failed to increase pension savings as they neared retirement age and a similar number of people close to the default retirement age (aged 60-64) add to the group of potentially woefully underprepared retirees.
Saving for an enjoyable retirement shouldn’t be left to chance. Despite having more sources of drain on income, older workers should really be learning what exactly they need to start doing to enjoy retirement without worrying about money.
It’s crucial you understand exactly how much you need to save, the optimal time to expedite the savings process, and how to handle balancing living happily and healthily now versus planning and saving for the future.
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