Standard Life Aberdeen have released their Class of 2021 report - which includes a survey of people who intend to retire this year.
Of those surveyed - with 60 being the average age of the Class of 2021 retiree - 37% say they have sped up their retirement date in the past 12 months, while 12% have delayed it.
The report found that although many of the respondents were looking forward to giving up work, many had no intention of doing so fully, with 56% not planning to give up work altogether. The report stated “Whether it be a financial or emotional driver, the growing trend of working in retirement is clear from our research.”
Just over a quarter (27%) planned to work part-time rather than leave employment altogether, 22% plan to reduce their hours, nearly one in five (19%) will spend time volunteering while 6% wanted to start their own business.
These figures are higher in comparison to those who retired in 2020 during the height of the pandemic, as just over a third (34%) of last year’s retirees decided to continue working to some degree.
Ben Hampton, Head of Retirement Advice at Standard Life Aberdeen stated:
“Longer life expectancy, volatile investment markets and ever-changing regulation are just some of the reasons why the notion of ‘retiring’ is currently in flux, not to mention the impact of the coronavirus pandemic on people’s immediate and longer-term financial priorities and plans.”
Of those surveyed, the average value of their pension pot is £366,000, however a third have less than £100,000 and 21% need to sell their property or downsize to fund retirement.
The retirees plan to spend an average £21,000 a year (which is about £10,000 below the average UK household income of £29,000). However, to cover this spend over the course of a 30 year retirement, a retiree would need around £390,000 in savings on top of their State Pension income - which for the year 2021/2022 is £179.60 per week, or around £9,000 a year.
In actual fact, it is more likely than not that the retirees of 2021 will need much more than £21,000 per annum when inflation is taken into account. Even so, based on this average spend, two thirds of the Class of 2021 still risk running out of money in retirement.
Women feel far less financially ready to retire than men – with 34% feeling very confident versus 43% of men but despite all of these concerns, 96% of 2021 retirees say they feel emotionally prepared to retire, while 93% also think they are financially ready.
