Research by Canada Life reveals almost a third of over 40s plan to work beyond the state pension age.
The research of homeowners over the age of 40 states that 30% of those surveyed don’t believe they can afford to retire when they want to, while a further 30% don’t know at what age they can retire.
A quarter of people surveyed plan to access their private and state pension pots only when they hit state pension age, with just 10% planning to delay accessing all their pension savings while they continue to work into their retirement.
Andrew Haley, Chartered Financial Planner says “The traditional ‘cliff edge’ retirement is becoming an outdated concept as the economy around us changes and we adapt to new ways of working. Unfortunately, this presents us with a greater challenge in planning for retirement as the goalposts seem to be continually moving”
“Those in their 40s will be balancing planning for retirement against other priorities such as the paying down the mortgage, raising children, progressing in careers, or perhaps building businesses. For many of us, our 50s (perhaps even 60s) will be a golden time to make significant contributions towards pensions or other investments. Ultimately this can give us the financial freedom to make confident decisions around work and retirement”
Furthermore, 27% of those surveyed plan to access their pension pot as soon as they are able, even if they are still working. This is currently age 55 for private pensions, moving to age 57 in 2028.
However, this would trigger the Money Purchase Annual Allowance (MPAA), which limits the amount you are able to contribute to your defined contribution pension pot each tax year from £40,000 (for most people) to just £4,000. Earlier research (by Canada Life) found that 43% of over 55s who are working are totally unaware of the MPAA restrictions, while another 40% (of over 55s) don’t know a lot about the restrictions.
“Understanding the technicalities of the Money Purchase Annual Allowance (MPAA) and other legislation can have a significant influence in getting this planning right” says Andrew “a financial adviser will help cut through the noise to make sure you feel informed and make the most of your opportunities. As recent research by Aegon* found, those who do seek financial advice have on average £246,000 in their pension pot compared to £95,000 for those who don’t”
“Having a financial plan in place can help bring clarity to where you are in your journey, how much you need to be saving now, and can give some idea as to how retirement might look. Financial planning isn’t a one-off event and is something you revisit as your life, your goals and the world around you changes”
*10,000 people surveyed by Aegon
We always recommend that you seek financial advice before making any financial decisions
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