- About 47% of pensioners stopped working earlier than planned.
- About a third said they were not in a good financial position to leave their jobs.
- Far more women were in a bad position to retire than men.
A new study shows that many older people are being forced into early retirement even though they can’t afford it.
About 47% of retirees, or about six million people, stopped working earlier than planned, but only about a third did so because they had already saved enough money to live to old age.
Illness, stress and being fired were other common reasons given by people who retired early, and about a third said they weren’t in a good financial position to leave their jobs, according to a study by financial services specialist LV=.
Forced to stop work: Illness, stress, and being fired are common reasons cited by people who have retired early.
It turned out that every fourth person who retired early did so at least five years earlier than planned, and men more often than women.
But overall, 37% of women say they weren’t in a good financial position to retire early, compared to 22% of men, says LV=.
A separate study by Fidelity International found that 30% of retirees in the UK are worried that they don’t have enough money to get through their old age.
According to him, about 24% of pensioners who do not have enough pensions are considering returning to work part-time.
How to pay off your pension if you are afraid that it will not be enough – see below
LV= gives the following summary of the reasons why people stopped working early. Some of the more than 900 retirees surveyed were motivated by more than one factor.
– About 31 percent, or 1.8 million people, said they could afford early retirement.
– And 27 percent said they don’t want to work anymore.
– Among those who felt compelled to retire early, 25 percent left their jobs due to ill health or injury, 17 percent due to stress or mental illness, 15 percent due to layoffs, and 6 percent to care for a partner or a parent in poor condition.
– About 9 percent of people said they retired because they didn’t like their boss or the management at their employer.
Early retirement is the dream of millions of people and is achievable for those who have been saving for retirement for a long period, but it becomes a financial problem if you are forced to retire before you have time to prepare, says the LV= manager. director of protection, savings and pensions Clive Bolton.
“People who retire earlier have less time to put into a pension fund and their fund should last longer. They will need to recognize that they will potentially have a lower retirement income and be more at risk of running out of money in retirement.
“It’s helpful to have a good idea of the lifestyle you want, how much it’s going to cost, and how you’re going to pay for it.”
Bolton says young people who are focused on their careers, buying a house or starting a family can take action now to secure their retirement.
“The easiest option is to join your company’s pension fund and save as much as you can. Making extra contributions early in your career can make a huge difference to your retirement savings.”
LV= calculates that a 25-year-old person investing £100 per month, subject to annual inflation of 2 percent over 40 years, could have a fund value of £87,300 in today’s money at age 65. If you start at 35, it can create a fund. out of £58,300 in today’s money and if you save up to £45 you could get £34,400.
It was assumed that the amount saved increased with inflation at 2 percent per year, excluding employer contributions, that it was supplemented by a 20 percent tax credit at the base rate, that this growth in investment was 4 percent per year after deducting expenses. .
Meanwhile, Fidelity International reports that pensioners have considered the following measures to cover the pension gap.
Fidelity surveyed 3,000 British adults in August 2022 and 2021.
“The rising cost of living affects each generation differently,” says Ed Monk, associate director of personal investment at Fidelity International.
“Those in retirement are faced with the challenge of covering increasingly expensive essentials with their pension and investments, knowing that whatever they spend now will diminish their wealth in the future.
“Some are considering some form of return to work to supplement their long-term savings. While job vacancies across the country remain high, we are starting to see their numbers drop, meaning that competition for positions will increase.
“Retirees who are considering returning to part-time work should be aware of how this could affect their pension, especially if they already have or plan to access it.
“Under the Money Purchasing Annual Allowance (MPAA), once you take any money out of a tax-efficient pension, you can only contribute up to £4,000 a year into your pensions while still receiving tax relief. Compared to a full £40,000 annual allowance, this can make a big difference to your future income after retirement.”
How to adjust the amount of your pension if you are afraid that it will fall
To get started, examine your existing pensions. Generally speaking, you need to define schemas as follows:
– Current value of the fund
– Current transfer cost – because there may be a transfer fee
– Whether the pension is in the final salary or in a defined contribution scheme
– Are there any guarantees, such as a guaranteed annuity rate, and will you lose them if you transfer the fund
– Planning for retirement at retirement age.
You can use the retirement calculator to see if you have enough money – look here for “This is money”.
You have to add the projected figures to what you expect to receive from the state pension, which is currently £179.60 a week or so…
Credit: www.thisismoney.co.uk /