Retirement is a period of our lives that many of us aspire towards – a time when we’ve paid our dues and get to relax and spend our time doing the things we enjoy most. But our latest research has revealed that a growing number of us are feeling increasingly anxious about retirement – for both financial and emotional reasons.

With the rising cost of living increasing financial pressures on income and savings, ‘retirement anxiety’ is increasingly becoming an issue for over 40s.

Our latest research revealed that:

  • Almost two-thirds (58%) of over 40s are anxious at the prospect of retiring, with a fifth (20%) ‘very anxious’ – a 70% increase on our findings in 2022 (12%).
  • Nearly 2 in 10 adults (18%) told us their anxiety is severe enough to keep them awake at night.
  • With more than 1 in 10 (11%) saying their anxiety is affecting their personal life and relationships.

As a result, 1 in 8 adults (13%) have delayed their retirement plans because of their anxiety – rising to almost 2 in 10 (18%) over 55s.

But despite this, almost half (41%) have done nothing to prepare for retirement.

Tips to help you keep anxiety at bay

1. Take stock of what you currently have

With 4 in 10 adults (39%) worried they won’t have enough money to last through retirement, and a third (33%) worried they won’t be able to afford the things they want to do, the first step is to realise what you already have. This will help you understand how close you are to the retirement you want, and what gap (if any) you’ll need to fill to achieve this.

Remember, individual savings accounts (ISAs), other savings and investments, and even rental income from property you let out can make up your retirement income - it’s not just your pension.

The state pension will also top up your savings. In 2023/24, the full state pension is £10,600. It’s currently available to access from age 66, but this will rise in future.

Once you know what you already have, you’ll be able to match this to what you see yourself doing in retirement - remembering this could last 30, maybe even 40 years! You can use The Pensions and Lifetime Savings Association’s Retirement Living Standards as a handy benchmark.

2. Save as much as you can

Now you know how much you might need and what you currently have, you can start planning how to plug any savings gaps.

With more than two-fifths of adults (43%) not having saved enough to be able to afford to retire, and over a quarter (27%) embarrassed they hadn’t started planning earlier, having a plan can help ease these worries.

Pension savings are one of the most tax-efficient ways available to save for your retirement. As well as offering between 20-45% tax relief, depending on your marginal tax rate, your employer will also be helping you save towards your financial future - further boosting your retirement savings.

3. Leave your savings alone

Nowadays, 3 in 10 (29%) adults are worried about how to save for their retirement while still having money to live on now.

While the rising cost of living is putting pressure on many households try, where possible, not to dip into your retirement savings early.

This is where household budgets can come in handy – helping you identify potential areas you can cut back to help boost your savings. As a rule of thumb, you should aim to:

  • Spend half of your household income on essentials, such as mortgage/rent payments, council tax, energy bills, etc
  • Spend 30% of your income on nice to haves, like eating out, subscriptions and holidays.
  • Save 20% of your income or put it towards reducing any debt.

4. Bring your pensions together

You may find it beneficial to bring multiple pensions together into a single pension pot. This could help reduce how much you’re spending on fees each year and make it easier for you to manage - with all your pension savings together in one place. However, it’s important not to rush into anything. It’s not right for everyone as you may have valuable benefits that could be lost if you move your pension. If you’re unsure, you should get financial advice.

5. Rethink how you take your income

With two-fifths of adults (39%) worried about how the rising cost of living will impact their retirement plans and a quarter (24%) worried about how the current economy will impact their pension and investments, now could be the time to rethink how you take your income in retirement.

While past investment performance isn’t a guide to future performance, the past century has shown that markets have bounced back after every major crash – it’s just how long they take to recover that’s uncertain.

Consider whether you could live off your other savings or income while the market recovers – allowing you to leave your pension(s) and investments invested for as long as possible.

6. Consider working during retirement

For many, gone are the days where retirement meant stepping back from the world of work altogether. In fact, we found 1 in 6 (17%) adults are worried about being pigeon-holed as ‘old’ when they retire and 1 in 7 (14%) are worried about losing their identity when they stop working.
Remember, retirement is what you make of it, so do whatever makes you happy. Whether that’s setting up a new business, pursuing a ‘flexi-retirement’ or working part-time, the most important thing is doing what’s right for you.

7. Get retirement advice

Retiring is one of those ‘big steps’ we see in our futures but for many, it always feels like it’s ‘further down the line’, even when we’re fast approaching it. But there’s lots of support available to help you navigate retirement.

The MoneyHelper website has useful information on pensions and retirement. And their team of pension experts can provide free and impartial guidance over the phone or online.

Alternatively, speaking to a financial adviser can help make sure you have a plan for your future that takes all your goals and plans into account. So you can concentrate on what you enjoy doing. There’s generally a cost for getting financial advice.

If you’re thinking about getting advice that’s specific to you, find out how we can help you.

The information in this article should not be regarded as financial advice. Please remember that the value of investments can go down as well as up and may be worth less than was paid in. Tax rules can always change in the future. Your own circumstances and where you live in the UK could have an impact on tax treatment. Information is based on abrdn’s understanding in September 2023.