Having children in the household impacts retirement decisions
New research among 45-65 year olds by Standard Life reveals having children living in your household can have a big impact on your retirement decisions. Almost half of respondents (49%) with two children in the household have no financial plans to provide for the future, compared to just over a third (35%) without children. Children also impact decisions on when to stop working and retire. You are more likely to retire later if you have children in the household with 10% of adults who aren't retired not planning to retire until 71-75 compared to only 2% who don't have children living with them.
Taking a career break or deciding to work part time can have a significant impact on your pension fund at retirement. A female saving £150 a month, increasing annually in line with price inflation from age 20 to age 65, could have a pension fund of £559,000. Taking a 5-year career break from age 30 during which pension contributions stop reduces the pension fund to £480,000 - a decrease of over 14%. If you work part-time and half your contributions from age 30 onwards this reduces the pension fund to £380,000 - a decrease of over 31%.
John Lawson, Head of Pensions Policy at Standard Life said: "It isn't surprising that those with children living in the household have even more financial constraints than those without. Apart from the actual cost of bringing children up there are so many other considerations these days - such as childcare costs, then for some there are school and university fees to consider. There is obviously only so much money to go round. But the loss of pension can be a forgotten cost for many when making decisions, in particular by going part time.
"But there are things you can do, and it's never too late. If we can save even a small amount for retirement it can make a difference. How and when we retire has changed, we no longer have to retire at age 65, we can work flexibly for much longer."
Other findings from the research of 45-65 year olds include:
34% of those with two children in the household will make up for lost time and travel the world in retirement
63% with two children in the household are looking forward to spending their time with their children and grandchildren in retirement
44% of those questioned without children in their household and who haven't yet retired intend to stop working completely. If you have one child in the household, 42% intend to stop work completely but if you have two children only 27% intend to stop working completely
As part of the Changing Face of Retirement research, Standard life has published a list of top tips to
help people re-engage with their financial planning.
1. Don't panic!
2. Seek professional financial advice
3. Continually review your financial goals
4. If you don't have one, make a plan. For tips, visit yourfuturemoney.co.uk.
5. Ask for a state pension forecast (and calculate your state pension retirement age) Go to: direct.gov.uk
6. Review your investments
7. Consider deferring taking the state pension at your default retirement age - for every year you defer taking benefits you can increase the pension by 10.4%
8. If you have moved jobs, ensure you have kept your old employer up to date with address changes so you can claim any workplace pension when you retire
9. If you can, increase your savings
10. If you're a higher rate tax payer, ensure you claim the tax-relief. Standard Life estimates 300,000 people are not claiming this currently (Tax relief may be altered and its value depends on individual circumstances).
To find an independent financial adviser, go to unbiased.co.uk