New research has exposed that nearly one in five people (18%) in their 50s and 60s are failing to save anything towards their retirement due to the rising cost of living and flat wage inflation. Referred to as a ‘mid-life savings crisis’, it means that millions of people close to retirement age are unaware of how much they’ll need to pay into their pension in order to live securely in retirement.
More than half of people in their 60s have not increased the contributions they make into their pension in the final years before retirement, a figure which rises to 64% when looking at people in their 50s. Inflation in the UK has reached its highest rate in almost six years at 3.1%, whilst the average weekly pay packet is growing at only 2.2%, making it more and more difficult to cover household costs and at the same time save for the future.
As a result of the additional squeeze on their funds, one in four people said that since reaching their 50s they have been electing to spend less money in order to put more away for when they retire. Around one in six of these people do this due to moving from full-time to part-time work or reducing their contractual hours, which has resulted in their income being reduced. One in ten people also said that they now spend more money than they did before reaching 50, explaining that they like to splash out on family members including children, grandchildren and elderly parents.
For anyone over 50 finding themselves in a mid-life savings crisis, the first stage is not to resign yourself to thinking that it’s too late to do anything about it. Whilst you don’t have the chance to grow your nest egg in the same way as someone at the start of their working life, starting to put money away each month, as soon as possible, is crucial. Taking full advantage of your employer’s additional contributions will also help. As employers will often equal whatever you save, paying in more of your monthly salary will mean your employer will contribute more too.
If you’re a homeowner over 50, another opportunity to increase your pension pot is releasing some of the equity in your property through downsizing. Whilst it might be an emotionally challenging decision to move from your family home, it can be something worth exploring to provide a boost to your retirement savings and ensure you can happily enjoy your life after work.
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