How will you Fund your Retirement?


Attitudes to retirement are changing with more and more people expecting to continue working later and looking at different ways to fund their retirement.

Government reforms mean that millions will have to wait longer than they expected for their state pension and proposals to accelerate this reform would mean that everyone will retire aged 66 in 2020 and that women, who currently retire at 60, will retire at 65 by 2018.

Around six out of ten retirees have a private pension as well as a state pension to fall back on but the value of private pensions has been hit in recent years and confidence in private pensions has taken a knock.

According to recent research from Standard Life, just under half those saving into a private pension are also planning to top up their retirement income by other investments.

A quarter are expecting inheritance money and a quarter are planning on income from property: either from a sale or rental income. One in ten are planning equity release on their main home and one in eight plan to rely on their spouse or partner’s income.

Perhaps most startling is the statistic that around half a million people over 55 are simply not planning to retire. They may not have a pension plan or may simply not want to rely on their investments. Many more people are now working beyond the age of 65. Flexible options such as working part-time or starting a new business are becoming increasingly popular.

Margaret, 64, a former office manager, retired from her full-time job aged 60 but since then has been working from home on a self-employed basis providing secretarial support for a number of organisations.

She works two or three days a week. “The amount of work really can vary week to week,” she says, “and I was worried when I first started how it would all work not being in an office as I was used to but I enjoy still having the contact with people and I can still take days off and holidays, I just let my clients know which days I am working.”

In the current economic climate, continuing working may not be an option and it is important to start financial planning for retirement as early as possible.

“Relying on certain sources of income, for example an inheritance, could leave you short-changed, so seeking the right financial advice early on and taking practical steps to ensure you don’t have all your eggs in one basket may prove a prudent move in later years,” says John Lawson, head of pensions policy at Standard Life. Standard Life has recently launched a range of investment funds, called MyFolio which could be used as a retirement investment.

Work out when you plan to retire, your expected entitlement to state pension and the standard of living you would like when you retire. Check where you stand in terms of any private pension or investments and this will give you a guide as to whether your retirement plans need additional income. And don’t forget factors like your health and age which could impact your retirement options.

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