It is an unfortunate fact that the returns people have come to expect from their pensions has fallen considerably over the last decade and as a result many are finding that their pension income will not meet their requirement for income.
This is due to many factors including; poor investment returns, lower rate annuities, an increase in the cost of living, and low interest rates. As a result many are electing to remain working beyond retirement.
It has been suggested that as many as four in ten will work at least part-time in retirement to supplement their pension income.
Whilst this may be achievable for many shortly after retirement, the danger is that the income shortfall will not go away and at some point in the future part-time work will not be achievable.
Future generations should take note of this statistic and act now at a younger age to ensure that they will have sufficient income at retirement age. Putting a percentage of your income to one side through pension, savings or ideally both will give a much greater chance of a happy and relaxing retirement.
The government’s new auto enrolling pensions for all employees will at least ensure that everyone has a private pension, but it is up to the individual to ensure they will have enough for their needs at their desired retirement age. Working beyond retirement to supplement a pension is only a temporary solution, it is not a long-term fix for underfunded pensioners and this issue can only be rectified if it is identified at a younger age and acted upon.
The Financial Advisers at The Money Map offer pre retirement counselling aimed at working out how much of your salary you should put to one side in order to meet your retirement goals. It is vitally important that you know how much you are due at retirement; it should not come as a shock when it is too late.