Retirement plans altered by COVID-19

The COVID-19 pandemic has impacted on every aspect of our lives. This is affecting individuals’ financial situation and, for many, their plans for retirement.

If you are approaching retirement in the next 12 months, we suggest that your plans should be under continuous review.

The pandemic threatens to push over-50s into pension poverty. The number of those over age 55 dipping into their pension early has increased this year. This is because some have struggled to pay for essentials during the pandemic. To tide them over, an increasing number of over-55s have been taking advantage of pension freedoms and accessing their retirement savings early.

Some people may face an unexpected Income Tax bill if they continue saving into a pension after they have withdrawn money from a pension. This could happen for anyone made redundant who then re-joins the workforce and is enrolled into the company scheme.

When you choose to retire is important. The timing of it can limit or increase your earnings potential prior to retiring.

 Many who have been on furlough are now planning to retire earlier than they intended.

A significant minority of older people working immediately before the pandemic are now retired.

While some may have been planning to retire around this time anyway, this is not true of all.

Not all older individuals have wealth to help them weather income shocks. Among those whose income has fallen since the outbreak of the pandemic, 23% have household net financial wealth of less than £500 per person.

On the other hand, COVID-19 has made people take a step back from work, rather than stepping away entirely.

22% of people are now planning a more flexible retirement by simply reducing their hours. 43% of people worry that they won’t see their loved ones if another lockdown strikes. Therefore, there has been a trend in cross-country moves to be nearer to children and grandchildren.

While we are right to be worried about the lasting impact of this pandemic on all age groups, those in their 50s need to act urgently to get their savings back on track before retirement, having been forced to use their existing savings just to get by.

Want to understand your options for retirement? Whatever situation you find yourself in, we help you to understand your options for retirement and later life. Also we will look at how to plan for your future cash flow needs.