Let’s be honest, when you’re young, pensions are not top of your priority list. So it’s not surprising that a study by Standard Life found that 6% of workers had plans to reduce their pension contributions to meet rising costs.
Reducing pension contributions
In addition, Broadstone calculated that if a 20-something worker reduced their pension contributions from 5% to 3%, it could cost them over £60,000 by the time they claimed their pension. (If a 55-year-old worker did the same, they could miss out on around £10,000.)
This is in spite of a survey by insurer Royal London that found one in three people in their 20s think that the state pension will not exist by the time they retire. According to a pensions expert at Royal London:
“Concerns about when and how much state pension will be available might lead to an expectation that they’ll need to self-fund a greater portion of their retirement. Future financial security is likely to mean working for longer than previous generations and also saving more.”
It’s not just the young who are looking to find extra money either. More and more homeowners are taking on lifetime mortgages, aka equity release, to free up capital from their property to pay debts and access extra income.
According to the Equity Release Council, in the second quarter of 2022:
“Homeowners aged 55+ took out 12,485 new equity release plans between April and June this year, equivalent to 205 new plans being agreed each working day … New and returning customers withdrew £1.6bn of property wealth, with new plans sizes largely stable at around £135,000.”
However, equity release is by no means suitable for everyone and as Moneyfacts.co.uk website says:
“In the midst of rising interest rates, consumers may feel pressured to take out a lifetime mortgage, but it is imperative they seek independent financial advice to ensure it’s the right choice for both them and their relatives.”
All together now
You can’t separate your finances from your dreams, nor 100% bolt down your retirement plans in a changing world. You can’t predict your lifespan either. That’s why financial planning, retirement planning and estate planning are practically inseparable.
Financial planning helps you put in place the core funding for your retirement plans, whatever they may be. Without knowing your number – how much you have to fund your retirement – any plans you make are based on assumptions that may not be accurate or current.
Retirement planning is not just about how much you can afford to spend, but also how you spend your time. As a retiree, you are time-rich, and time is yours to spend as you wish.
Estate planning helps you make the best plans for a legacy you do not actually get around to spending. So you can help those you love once you are gone, across the generations.
Help from Paul at Panthera LIFE
Back when I was a full-time financial advisor, I found it very frustrating that most financial advisors solely focused on the “numbers” and products. Very few of my clients back then thought about (or were prompted to think about) how they would spend their retirement time. It was all about accumulating as much money as possible and then – what?
That’s why I set up Panthera LIFE, to help people plan for a fulfilling retirement. Many clients are surprised to learn that, far from not having enough to retire on, they actually have more than they need, and can retire earlier than they thought.
As a regulated financial advisor in my own right, I can advise clients like you on ways to maximise your wealth, assets and income, with a clear focus on your long-anticipated retirement. As Panthera LIFE, I can then help take you on to planning a retirement that is all that you hoped for and more.
Estate planning is a natural progression from retirement planning, or indeed retiring itself. I run Panthera Estate Planning as a separate entity to Panthera LIFE. This is so I can help retirees who have done the financial number crunching, got their retirement plans in place, and now want to ensure their legacy lives on (assuming of course you don’t get around to spending it!).
So, if you would like to talk to someone who can guide you from full time to retirement time to the end of your time, contact me: