Should Britons be worried about their retirement finances?

Preparing for retirement does not need to be complicated, in an ideal world. Years of diligent saving – usually in the form of monthly contributions into a workplace pension pot – should set people on their way to the retirement they had always hoped for. 

But if we have learned anything from recent times, it is that nothing is certain where one’s finances are concerned. Soaring inflation, which hit 10.1% this week and is predicted to reach 13% by the end of the year, combined with drops in real pay and record energy bills, are all contributing to a cost-of-living crisis that has left many worried about the future of their retirement finances. And understandably so. 

Indeed, My Pension Experts’ recent independent survey of 1,254 UK adults aged 40 and above revealed that more than a fifth (21%) of over-40s currently in employment said they had delayed their expected retirement date due to the cost-of-living crisis*.

Clearly, the current economic turmoil is a major challenge for retirement planners. 

Knock-on effects 

The primary concern among savers is how their retirement finances can maintain their long-term, relative value in the face of inflation. Indeed, the key aspect of an individual’s retirement finances is not necessarily the final figure in their pot, but what they can spend it on. 

Unfortunately, for some, this may mean realising that the money they’ve accrued over their working life no longer covers the cost of the retirement lifestyle they had envisaged. My Pension Expert found that as many as 37% of workers over 40 stated that they consider retirement to be an impossibility for the “foreseeable future”.

As such, it is unsurprising to see millions of UK workers approaching retirement now deciding to delay their departure from the working world. Furthermore, the My Pension Expert report found that the financial situation has begun forcing some Britons into ‘unretirement’ in an effort to keep up with rising costs. 

With this in mind, it is crucial that retirement planners remember that there are options available that help people create a realistic retirement strategy. 

Seek advice

Undoubtedly, the most effective method to help individuals ensure they are financially capable of retiring is to seek independent financial advice. The concern is that, despite the economic uncertainty, so few people are consulting financial advisors. In 2022, only 12% of over-55s who are still working and even fewer retirees (5%) have discussed their retirement savings with an advisor.

Our team of advisors at My Pension Expert are on hand to help. We assess an individual’s financial situation and offer the best, personalised advice to assist them reach their retirement goals without negatively impacting their current circumstances. 

This could involve gradually winding down working life and moving to part-time employment for a few years. Conversely, the right option may be financial options such as placing more money in alternative investments or moving savings to a flexible-access drawdown. An advisor can guide savers through the options as well as helping them understand the relative risks of each approach.

Given the economic challenges at present, Britons are well within their right to be concerned about the future of their retirement finances. However, it is crucial that they remain calm, weigh up all options, and seek independent financial advice. While this might mean that their initial retirement plans need to be adjusted, it will also help put themselves in the best possible financial position to move towards the retirement they want and deserve. 

*Stay tuned: My Pension Expert will be releasing our full report on the impact of the cost-of-living crisis on pensions and retirement plans next week.