Planning for real retirement
The latest Aviva Real Retirement Report contains some interesting findings about the views and circumstances of those aged 55 and over as they prepare for and enter retirement.
The report looks at three distinct phases of retirement.
Pre-retirees, who are 55-64 years old, are in the countdown to retirement.
They have experienced the biggest increase in income since the start of 2012, but also have the highest credit card debts, on average £941.
This group are most likely to own a second home and are least likely to talk about finances with their spouse or family.
The second group is retiring, 65 to 74 years old, and they have just passed the age at which most people retire from full time employment.
Those retiring have the largest cash savings, on average £25,938.
They are most likely to say that ensuring they are healthy enough to enjoy their retirement is a priority. In fact, 75% of those surveyed within this age range said this was a priority.
The retiring group are also more likely to choose a retirement plan that provides income to a spouse if they pass away.
The final group is the long-term retired, age 75 and older.
This group spend the most of any age group on their household bills. This are most likely to own their home outright, with 81% in this age group responding to say they were home owners.
The long-term retired are most keen on having more time for themselves, with 70% saying they want more time to do what they want and 53% saying they want to spend time on hobbies.
What this research tells us is that retirement changes as we get older; retirement is no longer a one-off event, but instead a gradual shift from full-time employment to full-time retirement.
The nature of retirement changes as we get older, and our financial planning should reflect these changes.
When thinking about retirement, we encourage our clients to consider how they might spend their time (and money) at different ages. Often we work with clients to structure financial plans which deliver different levels of income and capital throughout the retirement journey.