Older workers are hoping to fund their retirement by downsizing, an inheritance or even a lottery win, according to Aviva’s latest Real Retirement Report.
The report surveyed 3,327 UK adults aged 50 and over, of whom 1,829 are still working. A quarter of respondents said they aim to profit from downsizing to a smaller home or moving to a cheaper area.
A similar proportion (24%) rely on receiving an inheritance. And surprisingly, 13% say they are relying on a lottery win to afford a comfortable retirement, despite the odds of winning the National Lottery being just one in 45 million.
Lindsey Rix, managing director of Savings and Retirement at Aviva, says: "As everyday financial pressures take their toll on older workers, many are postponing retirement planning and are instead relying on factors other than savings – many of which are outside of their control – to afford a comfortable retirement."
However, she cautions even those options that might seem guaranteed, such as making a profit from selling a home, could pose a challenge should economic or market conditions change.
"Wherever possible, retirement saving shouldn’t be left to chance. Although older workers have multiple demands on their income, taking time to understand what needs to be saved in order to afford a good standard of living in retirement, and putting more away each month – no matter how small the increase – can make a big difference."
Fiona Tait, technical director at Intelligent Pensions, says: "These are worrying but not entirely unsurprising findings; it is well known that the majority of people do not actively consider their pensions until they are very close to retirement, by which time the most feasible options may well be to sell the house or rely on an inheritance."
She adds the best time to increase pension savings is when income is increasing towards its peak. "The additional earnings are not yet part of regular expenditure and it is much easier to do without something you are not reliant upon than to have to give something up after you have become used to having it."
"People in their fifties should really be thinking about what will come out of their pension, and using this to drive what they put in, rather than the other way round. A number of ways of facilitating this have already been put forward and I would welcome the early introduction of the proposed Pension Advice Allowance, an increased employer-funded advice exemption, and access to PensionWise at an earlier age."
This article was written for our sister magazine Money Observer.