The middle aged struggle of avoiding poverty in retirement

It may be a brave new world, but not all of us are feeling too bold about the future.

Some of those that make up the current middle-aged generation of the UK believe that they are headed straight towards a doomsday retirement situation, struck with fear of ending up in poverty.

Four in ten people between the ages of 40 to 65 can’t properly estimate their own total pension savings by the time retirement comes around.

Two in three Britons between the ages of 35 to 50 are possibly on this depressing route towards retirement.

Approximately 65 percent do not believe they will have enough of a pension pot to be comfortable by the time they reach old age.

About two-thirds of 40 to 65-year-olds that currently hold retirement savings worth less than ￡250,000 are of the opinion that their pension pot will end up paying out more than the state pension.

However, it is estimated that ￡250,000 of retirement savings would actually provide less than ￡159.55 per week – the current full state pension.

We are in the grasp of a mid-life pensions crisis with all the talk of a pensions timebomb seemingly not too far off the mark.

Millions of people are reaching retirement and into potential impoverishment! The huge divide that exists between expectations and reality when it comes to retirement savings should greatly concern us all.

Experts have a growing concern about the middle age group’s inability for future financial security, with three-quarters already feeling less financially secure than their parents, many of whom were able to retire comfortably with satisfying final salary pensions.

Research has indicated that six percent of this current age group are relying on an inheritance of some shape or form to fund their retirement and another problem occurred when average life expectancy increased to 81 and residential care costs went up along with it.

This potentially wiped out a majority of inheritances. Experts are estimating that between half and two-thirds of the annual salary earned before retirement will be required to maintain a similar lifestyle later on.

Nowadays, the average salary in the UK is roughly ￡27,000, which indicates that 35-50-year-olds should be aiming for about ￡14,000 a year and yet there is still doubt among the populace (as a survey for Perrys chartered accountants found).

Remember that maintaining your current lifestyle is the goal in addition to taking into consideration the many other possibilities that life can throw at you.

Facing Fear Head-On

In light of these expectations for all middle-aged men and women heading into retirement, there seems to be only one thing that can be done. You have to face your fears head-on. Take charge of your life and be proactive.

A study found that pension freedoms are attempting to tackle the issue as quickly as possible, persuading millions of middle-aged workers to save more for retirement.

The age-group has been observed to work for longer periods in order to ensure that they have enough saved for retirement and a little more to last into their old age, admitting that one of their key fears is running out of finances in the middle of their retirement phase.

12 percent reported that they will be working either full-time or part-time past their original planned retirement date, as a precautionary measure.

Since the pensions revolution which allowed savers to access their entire pensions pot without being forced to purchase an annuity, millions with Defined Contribution pensions are taking advantage of the newfound leeway, accessing ￡15.74bn through 3.2m transactions since April 2015. Concurrently, many have reopened lapsed pensions to begin saving again, in the hopes that they will be granted more control of their money upon retirement.

One in seven that make up this age group (approximately 14 percent) has stated that they would make more of an effort to learn about retirement savings.

Accepting that you are the one that has to take responsibility to try and ensure that you have enough money to last throughout your retirement is key, along with ensuring that you have enough for the retirement that you want and deserve.

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I’m Tyrone Skipper, a fully qualified, seasoned financial advisor with over 20 years of experience assisting high net worth individuals across the UK, NZ, UAE, India and Malaysia. Over the years, it has been a great honour to have the people and families I serve rely upon me as a steady hand, guiding them across the financial landscape. I specialise in investment planning including trust, education, insurances and retirement.