Pensions and payments in retirement

Survey by by iReach Insights on behalf of Aviva Life & Pensions Ireland DAC (Aviva)

Almost 6 in 10 Irish pension savers don’t know how much money they can expect in retirement

Top three retirement plans include travel abroad (44%), chill out (28%) and volunteer (26%)

Almost one in five (18%) hope to work part-time when they retire

Almost six in ten (58%) people don’t know how much income they can expect to get from their pension in retirement, with men (46%) more likely than women (38%) to understand what their pension pot will deliver.  Despite the poor understanding held by so many of the income they can expect in retirement, almost half (44%) hope to travel a lot when they finish work, and almost three in ten (28%) want to relax and do as little as possible. Just under one in ten (8%) believe they won’t be able to afford to retire.

These are the key findings of a new survey conducted by iReach Insights on behalf of Aviva Life & Pensions Ireland DAC (Aviva) which examined 1,000 people’s expectations of their pension fund, as well as the activities they hope to partake in during retirement.  The survey polled a 50/50 split of men and women aged between 25-65.

The top eight most popular pursuits in retirement are:

  • Travel abroad a lot
  • Chill out and do as little as possible
  • Volunteer work
  • Get a part-time job
  • Learn a language
  • Play sport
  • Start a small business
  • Go back to college / get appointed to Boards

So many people have little or no understanding of the income they can expect in retirement. Without an appreciation of what you can reasonably expect to achieve through your pension contributions, it’s very difficult to realistically plan for the future. Retirement itself needs to be funded – even aside from the travelling abroad that most people have in their sights. The day-to-day cost of living can really add up, particularly when you have no other source of income. While it is great that people are saving something into a private pension, it is important that they fully understand how adequate those savings will be for them in retirement. So, whether it’s to fulfil retirement aspirations or simply to maintain a relatively comfortable lifestyle in later years, it’s advisable that people have some sense of how much their pensions savings will provide them with and how their fund is performing. This will allow people to adjust their contributions, or perhaps adjust their expectations of what retirement will look like.

Eoin Kennedy, Aviva

Headline findings from the Aviva survey reveal that:

  • While in general, men are more likely than women to have some insight into what they should expect from their pension fund when they retire (46% versus 38%), the results differ significantly for single men and single women. Just one in five (21%) single men said they understood what to expect from their pension pot compared to almost one in two (46%) single women.
  • Unsurprisingly, those closest to retirement were far more likely to know what to expect from their pension fund – 61% of 55-65-year-olds.
  • Of those who don’t know how much retirement income their pension pot will deliver, most (36%) say they know the figure is in the report they get from their employer or pension provider - though they don’t read it. The rest (22%) say they simply “don’t have a clue”.

People need to have a realistic idea of the basic living expenses and costs they will face in retirement – and if their pension will cover those. Otherwise, they could find themselves struggling in their retirement years – even insofar as keeping a roof over their heads. They may continue to have mortgage repayments in retirement or indeed, to be paying rent. The latest Census shows that there was a significant increase in the number of households with people aged 65 and over who are now renting from a private landlord – with that figure up 83% since 2016. Given the huge rental costs in this country, many people could run into difficulty covering their rent in retirement if they don’t have adequate pension savings or other financial resources

Eoin Kennedy, Aviva

Additional findings to emerge from the Aviva survey include:

  • Single women (20%) are less likely than single men (30%) to say they just want to “chill out” in retirement.
  • Couples are more inclined than singletons to want to travel a lot in their retirement (48% versus 36% of single women and 34% of single men).
  • Those nearest retirement are more inclined than other age cohorts to believe they can’t afford to retire, with one in ten (10%) of those aged 55 to 65 being of this opinion compared to a nationwide average of 8% and 6% of those aged 45-to 54-year-olds.
  • Women are more inclined than men to hope to do some volunteer work in retirement (32% versus 21%), with single women particularly disposed to feel this way.
  • Most people do not yearn to work for life. Only 3% of people don’t want to ever retire though men are twice as likely as women to feel this way (4% versus 2%), and even more so where single men are involved. Though the numbers are still small, eight times as many single men (8%) as women (1%) don’t want to ever retire.

“It is worrying that a significant portion of those aged 55 to 65 believe they can’t afford to retire. Generally, it is this age cohort who should have the best understanding of the retirement income they can expect – because retirement, and all the issues that come with it, are very much on their radar.  Generally, the earlier you start to save into a pension, the better the pension you can expect – but only if you’re saving enough. People of all ages need to do a reality check on their pension – and what they’re saving into it – before it’s too late,” concluded Eoin Kennedy.

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