Almost a third of over 40s have extravagant plans for spending their time in retirement – but have no financial plans in place to pay for them.
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Most couples need a combined income of at least £30,000 to pay for a list of hobbies and activities planned to fill their time once they give up work.
They range from dance classes, studying, playing poker to exotic holidays, say researchers for financial firm Aviva.
Around two-thirds of the over 40s have some idea of how they intend to while away their retirement.
Many expect at least three holidays a year, including one overseas. They also expect to run a car and to fund a list of hobbies and pastimes.
Underestimating pension income
The researchers calculated a couple needs at least £2,400 a month to pay for all these luxuries and day-to-day bills for each year of active retirement.
“Of course people are looking forward to not working, but many have lots of ideas about how to spend the time but not about how to source the money they need to spend to enjoy this time,” said Clive Barker, the firm’s retirement solutions director.
“Everyone has an idea of what they will do, but many are simply underestimating the amount of money they will need to pay for their lifestyle.”
The problem the research uncovered was although almost a third of over 40s had no savings and would rely on the state pension, but even out of those who are saving, 75% do not know if they are putting enough cash aside and 60% are worried they will not have enough to pay for day-to-day bills.
Overall, the survey revealed 60% of people wished they had started saving more money earlier in their working lives and more than half have no clue about how large a pension fund they need to produce £15,000 a year in income.
Those retirement dreams
“The latest official projections suggest someone could easily live in retirement for 30 years,” said Barker. “If they want a full and active life when they have stopped working, people need to have worked out early on just how much money they need and what level of saving is likely to support that income.”
Aviva also asked the over 40s what their top choices for hobbies and pastimes would be in retirement- and here’s the list:
- Cooking and baking
- Researching family history
- Going to the gym or taking up sports
- Joining a book club
- Visiting antique fairs
- Turning to creative studies, like writing or art
- Learning to play a musical instrument
- Dance classes
- Academic study
- Tinkering with cars
- Playing poker or bridge
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