According to Royal London -the UK’s largest mutual life, pensions and investment company – many retirees and pre-retirees are being forced to change their retirement plans, following the recent pandemic and current cost of living crisis.
New research has found that 72% of those aged 55+ are making the most of their retirement by prioritising experiences such as travel, new hobbies and days out over material possessions. So, how can pre-retirees adapt their retirement planning to stay on track with their initial lifestyle plans?
Materialism vs experientialism:
It’s clear that this generation of over 55s are a generation of experientialists. 40% of respondents in Royal London’s survey said that they valued material things in their 20s, compared to just 15% now. As you may expect, the need to spend time with loved ones, experience new things and make the best use of our time only grows stronger as we get older. It’s interesting to note that it’s men that have a higher tendency towards valuing possessions – 17% of men versus 13% of women. So, if experiences are an indicator of a happy retirement, how has the pandemic and cost of living crisis affected retirement plans for those over the age of 55?
Contentment during retirement
Whilst it is important to have goals for retirement, Royal London research has discovered that for 71% of over 55s, their life goals have yet to be realised.
The main reason for this comes down to finances, with 40% saying that this is why they have not achieved their dreams. 14% stated that family commitments played a role, alongside 12% admitting it was due to lack of planning and 11% saying that work commitments got in the way. Interestingly the COVID-19 pandemic has been a barrier for 10% – a barrier that a few years ago, retirees never would have seen coming.
Despite this, research has shown that 67% of over 55s are happy with what they’ve achieved in life so far, which has increased from 62% in June 2021.
Retirement worries
Even though retirement is supposed to be a rewarding and happy time, it’s still a part of life – so it’s unavoidable to not experience some form of worry. When asked about life goals, the next generation of retirees appear focused on creating lasting memories with family and living a healthy lifestyle. 52% agreed that spending time with family was the most important aim in retirement, closely followed by 47% focusing on the importance of relaxing and 45% wanting to maintain health and fitness.
Staying healthy appeared to be the biggest concern for those heading into retirement. Research revealed that over half (52%) were concerned with their health, followed by 39% worrying that they could not afford the lifestyle they want and 38% being concerned that they may not have enough money to get by. One in ten also highlighted the daunting possibility of struggling with loneliness and not being able to stay in touch with friends and family.
Financial security
The one thing that cannot be ignored when we talk about retirement happiness, is money. It’s one of the biggest factors that comes into retirement planning and it’s no surprise that it’s a key focus for under 55s, according to Royal London. Just under one in five are aiming to become debt-free during retirement and just over one in ten are hoping to ensure their family members are financially secure during retirement too. So, what can be done to help achieve retirement goals?
Reaching your retirement goals
Whilst joining new clubs, volunteering and staying active are all positive steps to addressing wellness concerns in retirement – there are options to overcome financial barriers to achieve your life goals as well.
As over 55s are now looking for further ways to fund their plans. 58% are considering working in retirement and 40% say that they would work if it enabled them to do more things they enjoyed. As 2023 is looking to be a tough year financially for the UK, 45% have said that they would continue to work if they were struggling to pay their bills. To aid this, Royal London have also provided five tips for financial planning in 2023:
- Consider continuing your life insurance. Although often seen as a non-essential expense, having life insurance will allow you to know that if the worse was to happen that your loved ones would not be left with a financial burden alongside emotional trauma.
- Get the best savings accounts possible. Although the market is currently not in the best state, it’s important to keep your money in the best place possible. You can do this by making sure that you are getting the most out of your savings account by being aware of all the options available to you.
- Contribute to your pension where possible. Particularly if your employer contributes, it’s important to make the most out of this. However, ensure that you have emergency funds in place to have something to fall back on for unexpected events.
- Planning is key. It’s easy to forget about planning ahead when the current cost of living crisis is creating so many financial problems in the present moment. However, you must remember to factor in the future to achieve an affordable life in retirement.
- You are not alone. If you are struggling with debt, talk to your lender or debt advice charity such as Step Change or National Debtline who will give you advice with your debts, free of charge.
Commenting on Royal London’s findings, Gary Beyer, Protection Product Lead from Royal London said:
“It is clear to see that those aged 55 and over value experiences more than anything else, including material possessions. Being able to lead an active, healthy lifestyle, try new things and travel to new places, combined with spending more time with family is the key to retirement happiness.
“After a tough few years following the pandemic and now with the added pressures of the cost-of-living crisis, being able to achieve these life goals might seem more difficult, but there are options out there for people who want to make their dreams a reality.”
There’s no doubt that the economic backdrop from the past couple of years has greatly impacted those planning to retire. With the current cost of living crisis only adding to the pressures, one in three people are now changing their retirement plans. Many are planning on staying in their jobs for longer or they are looking into employment during retirement. Whilst it may seem daunting, small changes and smart thinking can put you on the road to a more financially stable future, so you can live the retirement you’ve always hoped for.
