Over-50s workers in the UK could have a collective £5.3bn hole in their pension pots due to cutbacks on retirement savings over the course of the pandemic, new research from Legal & General Retail Retirement (LGRR) has revealed.
Figures suggested that over-50s saving less towards retirement will have contributed an average £3,283 less over the course of the pandemic than they otherwise would have.
The new findings, based on a survey of 2,160 UK over-50s, estimate that approximately 10% of pre-retired over-50s – a figure equivalent to 1.4 million people – are continuing to save less every month when compared to before the pandemic.
At present, those over the age of 50 who are saving less have reduced their monthly savings by £155 a month. At the peak of the pandemic, however, this figure sat at an average of £219 less a month.
LGRR found that over-50s workers who are continuing to save less are doing so for a variety of reasons, such as pay decreases (39%), redundancies or job losses (22%), and the impact of being furloughed (13%). Furthermore, one in five over-50s saving less (20%) have also had to reduce their retirement contributions in order to provide more monetary support to their loved ones.
Legal & General Retirement Solutions managing director, Emma Byron, commented: “It’s completely understandable that those who have faced financial hardship as a result of the pandemic may have looked for opportunities to cut back on their outgoings.
“However, as our research shows, saving less, particularly for those in their fifties, could have a significant impact on retirement prospects and planning. Our own analysis suggests that those who have saved less would, based on the median average, need to bring their contributions back to pre-pandemic levels, then pay an additional £41 per month to make good on their shortfall.
“If the same saver does not bring their contributions back to pre-pandemic levels they might need to delay their retirement by more than four years to reach the levels they previously would have saved before cutting back on their monthly contributions.”
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