More than half of Generation X are not confident they will have saved enough to achieve a good standard of living in retirement, research suggests.
Some 52 per cent of Gen Xers, those born from 1965 to 1981, make the claim while 38 per cent say they lack confidence in the adequacy of their future savings, according to polling from retirement specialist Just Group.
The polling suggests that Gen X is struggling to save for retirement as a result of less generous pensions and more costly mortgages, as well as bearing the cost of looking after elderly and younger family members.
The poll found that 29 per cent of them are financially supporting their adult children, aged 21 and over
Gen Z ‘squeezed’
The poll found that 29 per cent of them are financially supporting their adult children, aged 21 and over.
A further 11 per cent said they were financially contributing to the care costs of their parents or elderly relatives.
Stephen Lowe, group communications director at retirement specialist Just Group, said: ‘It is clear that Gen X are feeling squeezed – their pensions are less generous, their mortgages are more costly, and many are supporting their children financially with some also helping with later life care fees.
Gen X are feeling squeezed – their pensions are less generous, their mortgages are more costly, and many are supporting their children financially.
‘In this environment with the cost of living crisis tightening budgets further it is perhaps unsurprising that people feel unable or unwilling to increase pension contributions.’
Separate research from Standard Life shows 19 per cent of Britons have spent sleepless nights worrying about retirement planning.
A further 15 per cent said they had a poor mental health, which has been created by the nervousness surrounding their preparation for retirement.
Standard Life’s research, which surveyed more than 6,000 people, found that 9 per cent have had an argument with their partner or family over retirement planning.
A further 7 per cent even needed time off work.
Despite this, 62 per cent have not sought advice or help, rising to 74 per cent for those aged between 55-64, and 75 per cent for those 65 and over.
> Worried your pension is falling short? Scroll down to find out what to do
Dean Butler, managing director for retail direct at Standard Life, said: ‘Preparing for retirement can be daunting, with some big decisions to make. Working out how much money you may need to build up for when you stop earning and deciding how and when to access it is no easy task.
‘Retirement is also a huge life event and choosing when to take the plunge requires thinking about your expectations for later life as whole.’
In the early 2000s, the percentage of people who had retired by the time they reached age 55 to 64 was fairly similar no matter how well off you were. according to the influential think-tank the Institute for Fiscal Studies.
But taking early retirement is increasingly the preserve of the wealthy, unless you are forced to give up work by becoming permanently sick or disabled, or a carer.
Being too ill to work is far more common among the poorest fifth of the population, affecting 39 per cent of those aged 55-64 in England, compared to just 9 per cent of those in the middle and most affluent groups.
Butler added: ‘It’s always worth getting support with retirement planning. If you’re in a position to seek financial advice, independent financial advisers can offer you tailored advice based on your specific situation and goals.
‘There are also a number of free guidance services like the government’s Pension Wise that can explain the options available, and remember to also speak to your employer and pension provider.’
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
What to consider if you are worried about saving for retirement
Standard Life offers the following tips on planning for life after work.
1. Think about when you want to retire
While many people are excited by the freedom retirement can offer, some worry about how they will fill their time and maintain their social connections.
Many employers and pension providers offer schemes to help prepare for this, and there are some online communities like The Joy Club to help meet like-minded people when retirement comes.
2. Get to know your retirement options
Deciding how to take your retirement savings can be one of the more confusing decisions to make. You can normally take your money as flexible income (drawdown); as one or more lump sums; or use it to buy a guaranteed income for life (an annuity).
You can also combine these options to suit your needs. You should check with your provider that your pension plan offers the options you want, and if not, you may need to transfer to another provider, although this won’t be right for everyone.
Deciding how and when to access your funds is important, so you may wish to get expert advice to help.
3. Calculate how much money you might need when you retire
‘It’s important to work out your ideal annual income in retirement. This amount will depend on your lifestyle and goals – for example, you might want to go on holidays abroad or do some home improvements.
‘You can learn more about how much you might need by checking the Retirement Living Standards published by the Pensions and Lifetime Savings Association.’
4. Check that your savings can support your lifestyle
You’ll then need to think about whether your savings can support your ideal lifestyle. You should start by checking the value of your pension plans, and what they might be worth in future, which you can do using a pension calculator.
Some people supplement their pension savings with things like income from part-time work, rental properties, or other savings, but everyone’s circumstances are different.
Thinking about your own financial situation and planning accordingly can help you make sure your money lasts for as long as you need it to.’
5. Track down lost pension pots
If you’ve had jobs that came with a pension plan, check that you haven’t ‘lost’ any of these pots of money. To help you track down your pots, you can use the government’s Pension Tracing Service.
Finding your pots and combining them into a single plan with a pension transfer could give you a clearer picture of how much you currently have in pension savings, and help you with retirement planning, but you should seek advice if you are interested in doing this.
How to sort out your pension if you fear it’s falling short
1) If you are worried about whether you will have saved enough, investigate your existing pensions. Broadly speaking, you need to ask schemes the following questions.
– The current fund value.
– The current transfer value – because there might be a penalty to move.
– Whether the pension is in a final salary or defined contribution scheme. Defined contribution pensions take contributions from both employer and employee and invest them to provide a pot of money at retirement.
Unless you work in the public sector, they have now mostly replaced more generous gold-plated defined benefit – career average or final salary – pensions, which provide a guaranteed income after retirement until you die.
Defined contribution pensions are stingier and savers bear the investment risk, rather than employers.
– If there are any guarantees – for instance, a guaranteed annuity rate – and if you would lose them if you moved the fund.
– The pension projection at retirement age. You can use a pension calculator to see if you will have enough – these are widely available online.
2) You should add the forecast figures to what you anticipate getting in state pension, which is currently £203.85 a week or around £10,600 a year if you qualify for the full new rate. Get a state pension forecast here.
3) If you are tempted to merge your old pensions, read our guide first to ensure you won’t be penalised.
4) If you have lost track of old pots, the Government’s free pension tracing service is here.
Take care if you do an online search for the Pension Tracing Service as many companies using similar names will pop up in the results.
These will also offer to look for your pension, but try to charge or flog you other services, and could be fraudulent.
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