How many pay days do YOU left before retirement? Knowing that figure could make a big difference to whether you will be enjoying the retirement you have planned.
New research from Aviva has shown that millions of UK workers are overestimating how many pay days they have left until retirement – including large numbers of those in their last few years of work.
The findings reveal a surprising gap in retirement planning among UK workers. The survey, based on employees being paid monthly, found that while many people think about the age they want to retire, or the amount they hope to have saved for their retirement, few consider the actual number of pay days left to achieve those goals.
In fact, more than a quarter (27%) of workers – the equivalent of around 9 million people – have no idea how many pay days remain before they intend to stop working.
Worryingly, the findings show that this lack of awareness becomes more noticeable with age. Almost a third (31%) of those aged 55 and over admit they don’t know how many pay days they have left, and amongst those aged 45 to 54, the figure rises to 35%.
Even more worrying is that some older workers drastically overestimate the time they have left to save.
Just over one in six (17%) people aged 55 and over, who could claim their state pension in around 12 years, believe they have more than 250 pay days left – the equivalent to 21 years of monthly pay cheques. A further one in 20 (5%) think they have over 500 pay days left, which would mean working for another 41 years.
In fact, many younger workers appear more proactive than their older counterparts, with more than a third (36%) of 25 to 34-year-olds having already calculated their remaining pay days: the highest proportion of any age group.
So what impact does finding out the real figure have on savers? More than a quarter (28%) overall said they felt concerned, and nearly one in five (18%) admitted they are shocked. However, on a positive note, a quarter (25%) said the realisation of how few they had has motivated them to take action.
Retirement expectations
The research also explored workers’ retirement expectations. On average, UK workers expect to retire at 64, but this optimism fades with age with almost three in five (59%) of those aged 55+ believing they will retire at 65 or later, and one in ten expect to work beyond 68.
Confidence in pension savings also varies widely. Nearly seven in ten (69%) 25 to 34-year-olds feel confident their pension will be sufficient to see them through retirement, compared to just two in five (41%) of those aged 45 to 54 and 46% of the 55 and overs.
When it comes to monitoring progress in pension performance, habits vary widely – One in six (16%) never check their pension pot, and a further 17% only check it annually. But, just over half (51%) say they do review their savings quarterly or more, with younger workers leading the way – two thirds (67%) of 25 to 34-year-olds check at least quarterly, and 17% of them check weekly.
A quarter (24%) of people admitted they didn’t know how much they would need in their pension pot by the time they retire. Almost a third (30%) believe they could live on less than having saved £250,000 – a figure that would buy an annuity of around £13,700 a year at today’s rates, or just £1,145 per month.
How to make sure YOUR retirement savings are on track
Knowing exactly how much you will need to save in order to secure a comfortable retirement isn’t that complicated… if you make use of the RetireEasy LifePlan.
Just enter the key bits of data, which should take just minutes, and you’ll be presented with a clear set of graphs showing you precisely how close you are to your targets.
Armed with that information, you can then make any necessary adjustments well in time.
You can also run different scenarios to see what might happen if your circumstances change… such as receiving an inheritance, retiring earlier or later than originally planned, or using some of your assets to help a family member get on the property ladder.
All this… for just a few pounds a month!
