Millions of baby boomers now have just a 10-year period in which they can either make or break their retirement plans. According to new research, only one in four fiftysomethings is financially prepared for retirement and one third have no retirement savings at all. But it is the steps you take in the final countdown to retirement that can have the most significant effect on the size of your eventual pension.
Pension planning has always been particularly important for those in their fifties, but today’s fiftysomethings face a series of challenges that no other generation has faced. The research, points out that those in this group have benefited from huge improvements in health and longevity: men retiring at 65 can now expect to live to 82, while women of the same age can expect to celebrate their 85th birthday.
Less positively though, many have seen their pensions and savings squeezed from all sides: company pension schemes have cut back while the value of the state pension has fallen.
But it is private savings that have been hardest hit: those in this age group have suffered a toxic mix of poor investment returns, rock-bottom interest rates and ever-declining annuity rates, so even those who manage to build a decent pension fund find that it secures a smaller income in retirement. The survey showed that those in their fifties were on average hoping to retire on an income of £18,100 a year.
But six out of 10 of those surveyed said their pension plans had been affected by the recent financial crisis. This problem was particularly acute for those on middle incomes (of between £50,000 and £70,000) and the nearer you were to retirement the more detrimental the effect on a person’s retirement plans. Women were also particularly ill prepared for retirement, having on average half the pension savings of men.
Despite these financial problems the majority of those surveyed (60pc) said they had taken no action to change their investment strategy, alter their retirement plans or protect their pension funds.
But there are steps that people can take to improve their pension prospects. Ignoring the problem completely is likely to make it significantly worse.
Below is the countdown to retirement, published by The Telegraph, which, whether you are 10 years or five years away, should help you get your pension planning back on track.