6 Surprising Facts About Retirement

Types of Pension PlansRetirement Planning

A lot of people are uncertain about their future, with many leaving retirement planning too late. Here are a few facts about it that you may not have known.

  1. More People Than You Think Have Little Saved

One in seven people retiring this year have no workplace or personal pension. Relying solely on the new flat-rate state pension will lead to an income of £159.55 a week. The Joseph Rowntree Foundation sets the weekly income benchmark for an acceptable standard of living at £186.77. Therefore, relying solely on the state pension dramatically undercuts that level by £1,404 a year.

  1. Healthcare Costs Are Astronomical

Research by Fidelity has shown that a retired couple can expect to spend an estimated £184,000 on healthcare in retirement. This value has been increasing steadily over the years and can drastically reduce savings. The primary factor for this has been the increasing life expectancy.

  1. Your Actual Life Expectancy

In the UK, the current life expectancy is 79.4 years for men, and 83.1 years for women. However, men currently aged 65 have a 78% chance of living for another 10 years, and woman have a chance of 85%. This is because at an elder age, you have passed a lot of diseases that are most commonly found in early life. You are therefore expected to live longer than the countries average age.

  1. Compounding Student Debt

The average student debt after university is currently around £25,000. Research has shown that someone with this level of debt, can expect to have £243,000 less in retirement savings. This is more than what you can expect to spend on your retirement healthcare bill.

  1. Investment Returns

In the first quarter of 2016, there was a small downturn in the market. Research by Fidelity showed that the average 401(k) balance fell to $87,300 from $91,800 at the same time in the previous year. Markets will always face small downturns like this due to short-term volatility. It is therefore important to treat investment as a multi-decade process.

  1. Your Retirement Date May Be Unexpected

55% of retirees retired earlier than expected, with health reasons cited as the number one cause. It is therefore not advised to rely on working longer to make up for a lack of savings. Not everyone is able to pull a Warren Buffett and work well into their 80’s. Ensure that you have a thorough financial plan in place to accommodate for all scenarios.