For many of us, retirement is a reward for all our years of hard work. It’s a chance to do the things we enjoy with the people we love most. However, for many of us, retirement can seem a long way off.
Britain’s household debt levels are at their highest since 2008’s financial crash. With debt demands and pension pressures mounting, are our retirement plans changing? According to the Tackling The Savings Gap Q3 2016 report by personal pension provider, True Potential, it seems they have.
For many years, a round-the-world trip has been the ultimate retirement pursuit — and it’s still the dream for the younger generation. When asked how they would spend their 25% tax-free lump sum, a quarter of 25-34 year olds said they would use the money to pay for the dream trip.
However, just 2% of over 55s said the same. As this age group is closer to retirement age, perhaps over 55s have a more realistic outlook on how far their pension will go, as they are more aware of the limitations of their savings.
A mid-range ticket for a 120-day Miami to Miami world cruise comes with a price tag of £48,000*. Considering that the average 55 year old’s pension pot stands at £51,446, the costs almost completely eclipses their entire savings — and is over three times their 25% tax-free sum (£12,900, based on the average pension post of £51,446).
So what would be possible? Well, the £12,900 tax-free amount would take those adamant on travelling halfway across the South Pacific, shortening the 120-day trip to 35 days in total. This is based on a single traveller — with a partner, the trip is even shorter, taking them from Panama Canal to California.
Have attitudes to holidays changed too? While 34% of 25-34 year olds said they would take regular holidays in retirement, just 10% of over 55s said the same. These shifting opinions in over 55s illustrate the growing realism around the potential their pension savings offer. Essentially, we’re realising the reality of our pension pots when it is too late.
These changing attitudes should highlight the importance of saving for retirement early to young people. Attitudes among 24-34 year olds are positively changing though; those putting nothing towards their pension pots dropped from 26% in Q2 2016 to 19% in Q3 2016.
* Based on brochure price of a 120-day cruise with Oceania, staying in an ‘Ocean View’ room
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