The economic environment has been challenging for many people for some time. High inflation and increased borrowing costs, for example, mean lots of us are feeling the pinch. This kind of uncertainty emphasizes the need to be ready for whatever life throws at you: especially in retirement.
A waiting game
Some people are already changing how they prepare for the future. A recent report sponsored by Aegon UK found that working for longer or putting off accessing retirement savings are the most common changes advisers see in client behavior.
Steven Cameron, Pensions Director at Aegon UK, said: “A delay of even a year or two can make a big difference to sustainable retirement income levels as a result of saving for extra years, having a longer period of investment growth and having fewer years of retirement to fund.”
Under pressure
Folks are also feeling the squeeze in the US. A report released by Transamerica Center for Retirement Studies® (TCRS) in collaboration with nonprofit, Transamerica Institute, highlighted the anxiety many feel about the levels they need to save for retirement. The TCRS’ 23rd Annual Retirement Survey, one of the largest and longest-running surveys of its kind, found the greatest retirement concern among US workers aged over 50 was outliving their savings and investments.
“Retirees and pre-retirees have limited financial means. Both groups are susceptible to the turbulent economy and inflation. A harsh reality is that many lack the resources to cover the cost of a major financial shock,” said Catherine Collinson, CEO and president of the Transamerica Institute and TCRS.
Maintaining a healthy outlook
In 2022, research by the Financial Conduct Authority found that 25% of UK consumers would consider withdrawing money from their pension earlier than planned to cover the cost of living. And, just as increased costs of living impact many of us, everyone gets ill at some point. Expenses from things like hospital care or even long-term disability can have a huge impact on our ability to save for retirement. However, it is possible to offset some of these challenges by taking the right measures early on.
Workers in the US can, for example, protect their retirement savings from unexpected events through voluntary employee benefit programs that cover things like hospital bills, cancer care and extended long-term disability.
“These kinds of programs can help individuals preserve retirement funds in situations where events beyond their control can force them to dip into or even deplete their retirement resources,” said John Stanley, senior managing director for Employee Benefits at Transamerica.
Thinking long-term
Planning effectively for a longer life can involve preparing for many different scenarios: for example, your future long-term care needs. A study by Aegon’s US business, Transamerica, found that, while 91% of participants recognize the importance of incorporating long-term care into their retirement strategies, many were unsure what to do about it.
“With nearly all respondents acknowledging the importance of planning for long-term care, it's clear that awareness is not the issue. The challenge lies in translating this awareness into action,” said Stanley.
Helping people address challenges in planning for the future is central to Aegon's purpose of Helping people live their best lives. Transamerica, for example, does this via its employee benefit programs by both educating clients and developing innovative products.
“We make our products easily accessible by offering many without the need for medical tests and by helping to ensure more employees have access to these kinds of insurance policies in the workplace,” added Stanley.
Start early
Planning for retirement can be complicated with so many important things to consider, that much is clear. This is why it is so important for people to begin their planning as early as possible to ensure they can be build the right financial foundations to be able to live their best lives.