Are you having a crisis of retirement confidence?

Pensions

MoneyPlus Features Team

6th September 2016 at 10:25am

“They’re just having a midlife crisis”. We’ve all heard this cliché used when describing the identity crisis that grips some men and women in early middle age, but there’s another dilemma facing our 40-somethings, and it’s one that’s not so widely recognised.

New research from Just Retirement suggests that those in their 40s can experience a midlife crisis when it comes to retirement confidence too.

This crisis is not so much hair plugs and Porsches but more pensions and pessimism!

“They’re just having a midlife crisis”

The fearful 40s

When conducting a survey of 1,200 people over the age of 40, they discovered those in their early 40s were the most pessimistic in their retirement outlook.

Only one in ten felt that their retirement planning would mean they would be comfortable in retirement and just 13% of over-40s said they were looking forward to it.

One third of those aged 40-45 wish they had started sorting out their retirement plans sooner, 18% saying that they find pension planning confusing and 10% dreading making irreversible choices around retirement.

It looks like a crisis in the making – but it’s not all doom and gloom for our 40-somethings as the survey also suggests we gradually become more optimistic as we move from our ‘fearful 40s’ to our ‘secure 60s’.

1 in 10 in their early 40s feel they’ll be comfortable in retirement.

Secure 60s

Those in their early 60s are more likely to believe they’ll be comfortable in retirement (32%), more likely to look forward to retirement (30%) and significantly less likely to dread making retirement choices (4%).

Stephen Lowe, group communications director at Just Retirement says: “When people reach their 40th birthday, the idea that they will eventually retire really hits home and the challenge of retirement planning means that they can suffer a ‘midlife pensions crisis”.

This appears to be characterised by confusion, lack of confidence in their retirement provision and concerns about what might happen.

“However – as with the more traditional midlife crisis – as they age and start to take positive steps to meet these challenges, they start to worry less about their retirement until, by their early 60s, almost a third are looking forward to this new stage in life.”

But this doesn’t mean that 60-year-olds are completely confident about the whole thing. Indeed, the figures still suggest that fewer than half of people in their early 60s (43%) believe they will be comfortable in retirement, and given that they’re not far away from it, this is particularly concerning.

Read more about what we really want in retirement from the MoneyPlus Features team.

So how can we avoid a crisis?

For those of a younger age – it’s a case of why wait? Being in control of your finances and saving from an early age can make the process far less stressful, and it can give you the confidence you need to know that your retirement will live up to expectations.

Start by auto-enrolling into your workplace pension if you haven’t already, and seek out professional advice along the way. It can help make your money work as hard as possible throughout your working life.

Take control early and you may be able to approach retirement without the midlife pensions crisis hitting.

40 not out

But if you hit 40 and sense the early rumblings of some pension paranoia, don’t panic as there’s still plenty of time to make a difference.

You’re likely to be working for another 20 years or more – which is 20 years’ worth of investing to give you a better retirement.

And going by research from the Office for National Statistics you’re earnings are likely to be approaching their highest during this decade, and hopefully by now you should be on top of your debts. All being good you should be in a strong position to start throwing some real money towards planning for your future.

Also if you’re worried about how much money you’ll have, include your State Pension when calculating your total retirement income too – it can make a significant difference. As an existing customer, you can login and try our useful tool to project your retirement income. You’ll find this in the Tools section.

Or if you don’t have access to online services, use the Government’s online calculator to work out the date when you’ll reach State Pension age and how much you may get in today’s money for your State Pension.

Alternatively, you could give our ‘How much will I need in Retirement’ tool a try. This should help you to understand if you will be able to afford the retirement lifestyle you want.

Still game

Just remember, in your 40s the numbers still stack up in your favour and you’re still in the game, but it’s important to act now.

Think positive and you can turn a crisis into an opportunity.

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