Soaring inflation, record fuel prices, and skyrocketing energy bills are all fuelling a cost-of-living crisis reflective of the UK’s 1980s economic turmoil. Consequently, financial confidence in the UK is at an all-time low.
And for Britons approaching retirement age, the pressure will undoubtedly be felt. Despite diligently contributing to their pension pot (or pots) throughout the entirety of their career, many are being hit with the unfortunate realisation that their money will not go as far as they originally thought.
Consequently, some may be worried about whether they will be able to retire at all.
This is certainly a concerning prospect. This begs the question of whether action can be taken to ensure that individuals are able to retire…
Potential delays
Perhaps the most obvious option for those approaching retirement is to simply delay their desired retirement date, even by a few years. Whilst this is unlikely to be a desirable option, as it might upend many people’s original plans, it will give individuals the opportunity to continue earning and saving for a bit longer. Consequently, they will be able to build stronger financial foundations for their postponed retirement.
Another potential option would be to partially retire and go from full- to part-time work. This will facilitate a gradual winding down of working life whilst allowing them to enjoy a regular stream of income. And, provided that the employee is aged 55 and over, they will have the option to dip into their pension savings as needed to bridge any financial gap which may emerge due to a slightly reduced monthly income.
Retirement finance options
It is also important to remember that there are retirement finance options available that help people create a realistic retirement strategy.
Firstly, individuals might consider placing some of their retirement savings in investments that offer higher returns. Indeed, investments have the potential to transform people’s retirement strategies and could provide strong returns, which could help their savings hold value against inflation. However, it should be noted that investments do present an element of risk, and their success is not guaranteed. As such, those considering investments should assess their risk appetite to calculate their financial capacity for potential losses.
Flexible-access drawdowns could also provide a viable option for individuals worrying about withdrawing too much from their pension. Indeed, they enable individuals aged 55 and over to choose precisely how much they withdraw from their pension, so they can reduce or increase their retirement income, depending on their requirements. Further, the sum of money that has not been withdrawn will remain invested, so the person’s pot can continue to grow over the years.
Seek advice
Of course, the most effective method to help individuals ensure they are financially capable of retiring is to seek independent financial advice.
At My Pension Expert, for example, our team of expert advisers can assess the entirety of a client’s financial circumstances, retirement requirements, and risk appetite and help them to create a sustainable strategy that will enable them to retire comfortably. For some, this may involve gradually winding down working life and moving to part-time employment for a few years. For others, it might mean placing more money in investments or moving their savings to a flexible-access drawdown.
Given the current economic climate, it is perfectly understandable that Britons are concerned about their retirement prospects. However, it is important that they remain calm, assess all their options, and seek independent financial advice. Whilst this might mean their original retirement strategy might change, it will mean that they are placing themselves in the strongest financial position, ensuring that they remain on route to retirement.