When it comes to retirement, is anything guaranteed?

‘When will I be able to retire?’ is a question that people didn’t have to ask in the days of final salary pension schemes. Today, it’s very much on the mind of anyone who is starting to think about what their later life could look like. So, how did we get here?

For most of us, it’s hard to believe that there was a time in the 1970s and ‘80s when company pensions were generous and there were enough people taking early retirement for the Organisation for Economic Co-operation and Development to call it a ‘strong trend’.

Fast forward to now, and our long term saving and retirement survey found that many people thinking about retirement are concerned about having enough to live on when they no longer work.

So how did we get from a trend towards early retirement to wondering if we can afford to retire at all?

The part played by employers

The system has been struggling since employers began to switch from ‘defined benefit’ (final salary) schemes to ‘defined contribution’ schemes back in the ‘90s. This largely shifted the pension burden from employers to employees as companies were no longer obliged to provide a specified pension at retirement.

An aging population and the State Pension

Meanwhile, the State Pension has been under increasing strain as the UK’s population ages and a higher proportion of the population than ever before are claiming the State Pension. Not only that, but as life expectancy increases, retirees tend to claim the State Pension for longer too.

The ups and downs of unpredictable pensions

In a nutshell, the State Pension, currently just £6,029 per year, simply isn’t enough to support a comfortable retirement. The upshot of this is that the onus is on individuals to boost their retirement income themselves.

However, even if you’ve saved diligently for decades, the pension you receive can be dependent on how the stock market has performed, among other things. So, until you retire, you can’t be certain about how much money you’ll actually have to live on.

Even small savings can make a difference

Even if you don’t have pots of spare cash to squirrel away, modest savings can still make a difference to the type of lifestyle you could enjoy in later years.

There are, for example, some affordable savings plans that provide you with a minimum return that is guaranteed. You could use these to boost your retirement income with a guaranteed sum that you can plan around.

Calculate your future

Want to see if there’s a shortfall when it comes to funding the retirement you want? Find out with our handy calculator.

How do your retirement plans compare with the respondents to our long-term savings and retirement survey? Find out here.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice. You should contact a financial adviser, who may charge a fee, if you want financial advice.

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