Saving enough money to fund a comfortable retirement is a problem for everyone, not just workers facing a tough time making ends meet.
More than two thirds of doctors, lawyers, teachers and dentists have no idea of how much money they will have to spend when they retire and doubt they can fund a lifestyle anywhere near the comfortable standard of living they have while working.
More than half are planning to downsize or take out equity release loans to help fund their later years, according to research by top people’s financial firm Wesleyan.
The study also revealed that more than 25% will have to keep working past retirement age because they need the money.
High expectations
On average, the firm’s clients figured they need just over £39,000 a year to pay the bills and maintain a reasonable standard of living when they retire.
However, this is almost three times the average pension income of £14,376 that HM Revenue & Customs (HMRC) says retirees actually receive.
Only 27% of professionals agreed they could finance this high level of retirement income from a pension, which is why so many are determined to tap into the equity of their homes to top up their pension incomes.
Even with extra income from property, almost two-thirds of professionals (61%) are concerned that they will either have to cut their living standards or run out of money once they have retired.
More than two-thirds (67%) did not know how much retirement income to expect from their pensions.
Financial worries
Despite their well-paid jobs, on 27% of professionals have plans to give up work early. Worries about finances are clear, says the Wesleyan, as more than a third (34%) were looking forward to retire early in 2011when asked the same questions in a similar survey.
Now, more than a quarter agreed they will have to work past their retirement age to boost their retirement savings.
Professionals seem poor at keeping track of their pension finances.
Just over half (54%) failed to remember when they reviewed their pension finances or had never done so. The rest reviewed their retirement objectives less than once a year.
Samantha Porter, Wesleyan’s group sales and marketing director, said: “People have two problems with retirement planning – they don’t set reasonable goals and often think they need more money than they really do once they give up work.”
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