According to recent research, many thirty somethings want to retire early. That’s a great ambition, but with so many factors to consider is this a realistic option for Millennials…
Being able to choose how you live out retirement is something we all look forward to. After 40-plus years of hard work, it’s reasonable to want control of your life.
For Millennials, the 18 to 34-year-old cohort, some interesting expectations have emerged from research conducted by the Opinium Research Panel.
Some would like to retire earlier than people are doing today!
Don’t be deluded!
Amazingly, one in eight surveyed said they expected to stop working at 55 years of age. They were the extreme, with the average response suggesting that they would like to retire around 63 years of age.
The leading paragraph in a recent Telegraph article suggested that “Millennials are deluded about when they will retire”.
While such headlines are harsh, it is important to warn Millennials about becoming complacent.
Unfortunately, younger people see retirees leaving full-time work in their early 60s. However, unless you understand specific circumstances it is impossible to make comparisons and think that similar returns can easily be achieved.
Many older workers are lucky to have defined benefit pensions. They will transition into retirement knowing exactly what pension income they will receive.
For people hoping to retire in twenty or thirty years’ time, things could be very different.
Be realistic about retirement planning
Planning your retirement needs to involve many factors. So many things have changed in recent years, and the uncertainty created by the coronavirus pandemic is likely to affect salaries and investment funds for years to come.
This means that any plans will need to be assessed regularly to see if corrective actions are required to keep things on track.
Unfortunately, Millennials need to appreciate that other aspects of retirement income are likely to change as they get older.
Pensions have changed
Many of today’s retirees who finish work in their 60s can collect defined benefit pensions. Such schemes provide good incomes for the rest of their lives.
Younger workers, especially Millennials, have switched to defined contribution pensions. Contributions from employers can be much lower and the emphasis on management of funds is placed on employees.
There are no guarantees. In many cases, it is now impossible to look to the future and guarantee a fixed level of income during retirement based on current-day earnings.
Other income will also be affected.
The UK state pension age is currently 66, rising to 67 by 2028 and possibly as high as 68 in the following decades when Millennials reach this age.
The reality is that Millennials might ‘have’ to work longer.
By contrast, older people were more likely to be realistic about their retirement prospects. On average, those over the age of 55 expect to retire at nearly 68 years.
Never too early to plan for retirement
Logic Wealth Planning always sets out to fully understand what clients want from retirement. We leave no stone unturned so that we can understand motives and income requirements.
Everyone is different, and everyone has different ideas and expectations. So we sit down and listen. Then, we’ll offer advice and discuss options.
With comprehensive planning tools we can help you match pension ambitions to what is achievable.
No matter what stage of life you are at, beginning the retirement planning process now means that you can set realistic targets that can be monitored, revisited and adapted when required.
Please call us on 0808 1234 321 or email firstname.lastname@example.org to start the discussion about how best to start enjoying income during retirement.
Please be aware the value of investments or income from them can fall as well as rise. We are here to help you make informed decisions as you put important things in place for you and your family.
* Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.