The pandemic has prompted the biggest single downturn in recorded history. Figures from the ONS point to a contraction of 9.9% in 2020, more than doubling the previous record. The downturn has come as a result of the large sectors of the economy being forced to close. Any business which relied on people entering shops, going for haircuts, or sitting around dinner tables, has found itself unable to operate.
Among the many consequences of this has been a decline in pension savings. Some savers have found themselves without enough spare cash to set aside. This is reflected in polling from equity release specialists Key Advice, which reveals widespread and growing anxiety among those approaching retirement age.
Are retirement concerns growing?
The report indicates that, among over-55s, the proportion of homeowners worried about their retirement savings has gone up from 16% in Q4 2019 to 22% in Q3 2020. We find similar trends in various categories of worry. 48% are now worried about falling ill and having to pay for care, up from 39% in 2019; 34% are worried about running out of money entirely, up from 27%; and 24% are worried about having to sell their home, up from 18% last year.
Comparison of Men and Women
There’s a well-documented gap in savings between men and women. This is a phenomenon with many complex causes, including choice of occupation, hours worked, and pay disparities. The gap is reflected by increased worries among women.
However, in the wake of the pandemic, worry has risen sharply among men, and not quite so sharply among women. 32% of men are now worrying about running out of money in retirement, a year-on-year increase of nine points. Women are still the more worried of the two sexes, at 35%, but the gap is shrinking.
Will Hale, the CEO of Key, the Equity Release specialists, comments: “Women who are disproportionately represented in hard-hit industries like hospitality and retail are already finding that their lower average salaries mean they are more financially vulnerable in retirement but both genders have been hit and are concerned about the future.”
What are the main concerns?
The subjects of the research variously identified a few different issues. One cited the fear of “losing my spouse and his pension”; another pointed to “being incapable [of organising]my finances when in poor or declining health”. Many of the concerns identified are more fundamental than a temporary pandemic and point to the ongoing challenge presented by an ageing population. “Some of us are living longer, but we are living in good health,” says one person. It’s a problem that increasing numbers of retirees are going to bump against in the near future.