Pension plans took a back seat last year as the coronavirus devastated the economy. Unfortunately, new research by Legal & General has shown that many over-50s fear that retirement is simply out of the question.
In mid-March, Legal & General released a report on how the pandemic “polarized the retirement opportunities gap for over 50 years,” and recently Spring, the UK-based home buyer, has broken down the results.
“The long-term results of the impact of Covid on the economy are becoming clearer by the day, but the current issue is retirement,” the organization noted.
“The discussion is not so much when it is possible, but now, if it is possible, 2.6 million people over 50 believe they will have to work indefinitely because of the financial hardship during the pandemic.
“The worst unemployment level in the UK last year was 5.1 percent, the highest since 2015. While the rate is falling (the latest reports suggest unemployment is currently at 4.9 percent) , many prepared for life outside the workforce are still feeling the effects.
“According to the latest research by Legal & General, over 1.4 million people aged 50 and over are having to adjust their retirement savings to reflect the financial losses they made over the past year.
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“The adjustments seem to vary from working for another three years to permanent work. Many people over 50 have lost around £ 500 a month, which is over 20 percent of the median monthly household income of £ 2,084.
“Given the significant impact on pensions and the minimum age at which people can access their private pensions, the number of pensions will increase from 55 to 58 in 2028. Any concept of retirement seems to be a benchmark that so often is further removed.
“While the final phase of lockdown and pandemic is in sight, and restrictions are being lifted and vaccinations are being rolled out at an impressive rate, the long-lasting effects will be felt for years, as so many over-50s experience.
“The promise of a happy and relaxed retirement and the prospect of permanent work are becoming all too likely.”
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Additional research by Royal London also shows that retired savers will be happy to embrace freedom and travel in a post-pandemic world, but that their financial realities will hold them back.
Royal London recently surveyed 1,000 UK respondents aged 55 and over. Analysis of the results found that 64 percent of those 55 and over plan (or hope) to travel more after the pandemic ends.
When asked what factors were preventing them from “achieving their dreams,” 36.6 percent of respondents said that lack of funds had put their plans on hold.
This was followed by work commitments (16 percent) and family commitments (12.4 percent).
In the face of these difficulties, Spring acknowledged that positive retirement plans might now seem like a distant memory, but there are “a number of ways” people can get their plans going again by freeing up money.
In the spring, some of the options for savers were broken down:
The debt has likely been built up by many retirees over the past year, but Spring has figured out how best to manage it going forward: “” One of the hardest things to deal with debt is the sporadic nature of the payments required, which means that Any planning you make is likely to be out of date by the end of the week, “it said.
“When you can put all of your debts into one manageable amount, you can focus all of your energy and debt management in one place.
“While you have better control of your finances, there is a chance that you will pay more over time. As with anything related to retirement, you should speak to a financial professional before making any important decisions.”
Demand for stock releases has increased in recent months, and according to an analysis by Moneyfacts.co.uk, lifelong mortgage selection has reached unprecedented levels as lenders expand options for borrowers looking for a stock release plan, up against 500 for the first time violate on record.
Detailed spring lifetime mortgages might be an option for retirees, but beware: “Lifetime mortgages are a type of equity release product that can help those nearing retirement get the money in their home,” said the enterprise.
“It’s a very similar process to remortgaging, but it’s only available to people over the age of 55.
“The potential problem that can arise with a lifetime mortgage – much like other stock-release products aimed at the older generation – is that when you die, the burden of repayment rests with your family.”
Spring closed with an examination of how the rules on pension exemption could allow immediate access to cash, but restrictions may apply. “Since 2015, the way people can access their pensions has changed fundamentally. Pensions are a thing of the past and are more comprehensive.” Control over your pension has become more general.
“This change means that you can (if you wish) withdraw your entire pension in one fell swoop (although this creates a tax burden that can often reach up to 40 percent) so that people can take advantage of their pension at their own discretion while doing this a very straightforward way to access money, the concept of accessing all of your money can be overwhelming and risky. As always, it is crucial to discuss financial steps with an expert. “
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