Too many people are going to rely on the state pension in retirement to provide for all their needs and wants, including their leisure activities, a Nationwide survey has found. Nearly half of the 2,400 surveyed rely on or plan to rely on the state pension for their post-retirement holidays and other leisure activities. Going on a cruise or lazing on an exotic beach somewhere might turn out to be a bit beyond the state pension pocket! The Basic State Pension is arguably not even enough to live on.
The Nationwide findings also indicate that more than a quarter of all UK adults who say they plan to retire have not started planning for it yet. When it comes to planning financially for retirement, women appear to be less prudent than men. Nearly a third of women planning to retire admit they have not yet started putting money aside to finance their retirement, compared to 24% of men. The survey indicated that while it is not surprising that nearly two thirds of 18 to 24 year olds have yet to start thinking about their retirement plans, astonishingly nearly one in four UK adults aged between 45 and 54 have still not made any financial provision for their retirement years.
53% of men rely or plan to rely on their basic state pension compared to 44% of women. Reliance on the basic state pension also generally appears to increase with age. Whereas only 39% of those aged between 25 and 34 plan to use the basic state pension to fund post-retirement leisure activities, this rises to 58% of people aged over 55. Is this a sad but inevitable outcome of not planning to save earlier for retirement?
The study reveals that seeing the Northern Lights is one of the most popular aspirations with more than two in five UK adults not yet retired admitting they would like to visit Northern Norway. A seven-night Northern Lights break to Lapland is likely to cost around £1,000 per person half board, inclusive of activities such as a snowmobile ride and a husky safari. If this trip was to be funded purely from the basic state pension, it would require someone to save up their entire state pension for a minimum of nine weeks.
In the Nationwide survey, people were asked how else they expected to fund their post-retirement leisure. The main responses were:
- money in a current account or savings account, including ISAs (44%)
- the cash lump sum claimed from a private pension (31%)
- an annuity (26%)
- money from property, such as rent from properties or downsizing (17%)
- inheritance from other people, such as family and friends (15%)
In addition, more than one in five (22%) of the survey respondents stated that they plan to continue working part-time during retirement in order to fund any leisure activities.
Without one or more of these additional income sources planned for, retired people are unlikely to have enough to achieve the lifestyle that they hope for. There is little doubt that the longer retirement savings planning is ignored, the more disastrous the outcomes for people’s post-retirement finances, and the tougher those later years are likely to become.