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Retiring 'class of '21' risk their pension pots running out

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Lucy Harley-McKeown
·2-min read
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Senior mature older woman watching business training, online webinar on laptop computer remote working or social distance learning from home. 60s businesswoman video conference calling in virtual chat
Analysis shows that two-thirds of 2021's retirees are at risk of running out of money. Photo: Getty

Two-thirds of people retiring in the UK in 2021 risk not having enough savings to sustain their planned lifestyles.

That's according to a new report launched on Wednesday by Standard Life Aberdeen.

The "Class Of" report, which surveyed UK adults planning to retire this year, looked at how ready the Class of 2021 is to retire. The research found that the average 2021 retiree plans to spend £21,000 ($29,280) a year in retirement – almost £10,000 less than the average UK household income (£29,900).

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However, two-thirds are sill at risk of running out of money despite the lower expenditure. The average value of a Class of 2021 pension pot is £366,000, which could prove to be too little to cover the planned outlay. A third of retirees admitted having less than £100,000 saved.

"Retirement is a marathon, not a sprint, and many could be going into it without sufficient preparation or planning," said John Tait, retirement advice specialist at Standard Life Aberdeen.

Tait said retirees should consider investments other than pensions when deciding whether they can afford to retire or not. 

Standard Life Aberdeen’s found that more than a third (37%) of those planning to retire this year are worried about not having enough money to last throughout retirement.

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Just two in five (39%) feel very confident that they’re financially ready to finish working this year, with a third (34%) of women feeling very confident versus two in five (43%) men.

Almost half (48%) are planning to reduce their usual spending to support themselves in retirement, while a quarter (27%) will work part-time to help financially. One in five (21%) are planning to sell their home or downsize to fund retirement.

Despite many admitting financial worries, Standard Life Aberdeen’s research found that almost two in five (37%) of the Class of 2021 have accelerated their planned retirement date in the past 12 months due to COVID-19.

The main reasons for speeding up retirement were: lockdown changing plans; health worries due to the pandemic; and job uncertainty.

Watch: Should I pay off debt or save money during the pandemic?