Nine million middle aged employees are “flying blind” into retirement

Recently, pensions firm Aviva conducted research into the understanding of finances in later life amongst employees aged 45 and over.

The findings revealed that the majority are sleepwalking into retirement, with 8.9 million middle aged employees not knowing how much they will need to save in order to enjoy a comfortable retirement and 5.1 million not knowing how much they already have saved in their pensions.

Furthermore, 43% of those questioned are unaware of how much they will receive from their state pension and 26% don’t know what age they will be able to start receiving it.

Aviva also found that most employees do not know what type of pensions they have and pension freedoms (introduced in 2015) have only added to the confusion. Additionally, with many people changing employers numerous times throughout their working lives, many lose track of the pensions they do have.

There is good news though! Aviva found that it is never too late to start saving! Aviva calculated that an employee with no savings aged 45 today, and earning the average UK salary of £28,000, could retire with £56,100 at age 65 based on the annual pensionable earnings of 8% from the employer and employee combined.

Managing Director of savings and retirement at Aviva, Lindsey Rix, says “Millions of mid-life employees are flying blind, and fast, towards their retirement. At the same time these employees are calling upon their employers for help.”

“Without a clear picture of what they currently have saved or might need to save for a comfortable retirement, our findings show many UK employees are approaching retirement with their eyes closed – with no realistic idea of how near or far they are from their destination.”

“As a first step, mid-life employees who are mystified by their pension savings should try to get a clear picture of what they have saved so far and how much of an income this can provide them with over the course of retirement.”

“For some, this may be a pleasant surprise, while for others, it could be the wake-up call that’s needed to spur them to take action. People whose pensions are in need of a boost shouldn’t be disheartened, however, as it’s never too late to save.”

To find out how much you could receive from your state pension click here to check your state pension.

If you believe you have lost track of any of your pensions the government also offer a pension tracing service.

For further advice and guidance from us to help you understand your pensions and agree a plan of action to help you achieve your retirement goals click here to request a call back from one of our advisers.

Written by Kay Crooke – Associate Practice Director at Prosser Knowles Associates Limited.