We don't take retirement seriously enough

by CCCS on 25 November 2011  |  4 comments
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A new survey shows just how ill-prepared we are for our twilight years.

We know that it’s not groundbreaking news that the older generation is struggling with debts. We’ve already talked about money misery for pensioners, the fact that older people are asset rich but cash poor and that the over 60s are the most likely to be indebted.

So with this in mind, are we as a nation taking this on board and planning more effectively?

According to the annual Financial Planning Survey commissioned by the Institute of Financial Planning (IFP), we’re not.

This is the fourth year that the Institute has organised a ‘Financial Planning Week’ campaign to raise the awareness and importance of financial planning.

You might think that the general public feels that financial planning is just for the wealthy, and gives us reason not to do it. But from the results of a recent poll, it appears that 73% of us don’t.

Despite concerns over the future standard of living in retirement, many people are not planning to put any money into pension plans to try and improve their position. Just 41% say they would consider making additional contributions into pension plans to avoid delaying their retirement due to the planned increases in the state retirement age.

So if we know the importance of planning for the future, it can be easily assumed that the public just don’t have the available surplus cash to save towards the future, and they’re concentrating on paying down debts or simply servicing everyday living costs. Many respondents of the survey are paying off debts and see this as their main priority.

Nearly half of Britons (47%) are not confident that they’ve saved enough to live comfortably when they retire and 14% have never made any pension contributions whatsoever.

If this is the case, what will the future hold?

You can apply for a State Pension forecast to predict what you will be eligible for come retirement age. But whether this will realistically be worth anything significant with the current state of inflation remains to be seen.

As retirement inches ever closer for everyone, more and more are completely unprepared and will have to continue working as retirement is economically unviable. Most worryingly, one in eight over 55s think they’ll “never” be able to retire.

For those fortunate enough to own a property, equity release is slowly becoming more popular as an alternative. Designed to allow retired homeowners access to their equity without having to sell up and move can be an ideal solution for some but offers no reassurance to those not on the property ladder, or with significant mortgages still outstanding

Changes to pension schemes

Come 2012, companies will be forced to enrol staff into private pension schemes in a bid to make us save more. Physically having to opt out rather than opt in should hopefully improve the future for many (although we’ve got worries about that change for low-income workers), but why not start early and take steps sooner?

Even if you’re struggling with debts and not able to maintain minimum payments to your creditors, you’re still entitled to contribute towards a pension and a more secure future.

So it’s better late than never. Take some inspiration from the IFP and take action to improve your financial fitness now. The IFP website includes practical tips, tools and information that you can use, including where to find quality professional financial planning help should you require it.

And if it’s the near future that's worrying you, and your debts are keeping you awake at night, use our online counselling service CCCS Debt Remedy. Retirement is something to look forward to, not put off indefinitely.

CCCS is pleased to support the IFP Financial Planning Week. It continues throughout this week (21st – 27th November), with a wealth of webchats, online workshops and articles to help you improve your financial situation.