Unplanned changes hit finances of over 55s
Aviva’s latest Real Retirement Report, which monitors the finances of the UK’s over-55s, also shows that one in seven (15%) report being made redundant, 11% were forced to stop work due to illness and 11% were forced into early retirement during that period.
Looking at the impact of these unplanned changes, 68% said it has had a detrimental effect on their retirement finances, with 34% having to cut back on their lifestyle, 7% worrying about how to pay an outstanding mortgage and 11% considering using assets such as their house to pay for retirement.
On top of this the Report found that the vast majority (74%) of over-55s said it is harder to find work after their 55th birthday and 35% said that they believed that employers valued youth and speed over experience.
Almost half (47%) of those who were made redundant felt this happened as their company was making cuts and they were simply included in those at risk and 31% chose to take redundancy as they were offered a good package. However, a shocking 8% said they believed their company chose to replace them with someone that they could pay less. Possibly as a result over-55s believe smaller employers (24%) are better than larger employers (9%) to work for when they are older.
Despite these figures some over-55s saw the ‘count-down’ to retirement as the opportunity to choose to move to part-tirement (5%), start their own business (3%) or resign their roles as they wanted less pressure (3%). In addition, 4% of those who had seen a premature end to their career through redundancy, illness or early retirement, saw this as the ideal opportunity to follow a long-held dream and start their own business.
Clive Bolton, ‘at retirement’ director at Aviva said: “Many people see the final ten years before they retire as an opportunity to build up their pension pot. However, this report clearly shows that almost 40% of over-55s experience a significant career disruption over this period – sometimes bringing a premature end to their working lives.
“With over two-thirds (68%) saying that this change to their working status had a detrimental impact on their finances, 34% believing that they would have to cutback on their life-style and 7% concerned about how they would pay off their mortgage – this is a serious issue.
“With the changes to the default retirement age, people will have more choice as to how and when they finish their working lives. However, they do need to remember that some factors remain out of their hands so it is important to financially prepare for all eventualities.”