Half of adults plan to use state pension to fund retirement leisure activities

Whether it’s going on a round the world cruise, lazing on an exotic beach or visiting the Northern Lights, nearly half (48%) of UK adults rely or plan to rely on the basic state pension of up to £110.15 per week to fund their post-retirement leisure activities according to new research from Nationwide Building Society.

More than a half (53%) of men rely or plan to rely on their basic state pension compared to 44% of women. Reliance on the basic state pension also generally appears to increase with age. While only 39% of those aged between 25 and 34 plan to use the basic state pension to fund post-retirement leisure activities, this rises to 58% of people aged over 55.

While the state pension is still seen as the primary source for post-retirement leisure activities, those polled state they also use or plan to use other forms of finance such as money in a current account or savings account, including ISAs (44%); the cash lump sum claimed from a private pension (31%); an annuity (26%); money from property (17%) or inheritance from other people, such as family and friends (15%).

In addition, more than one in five (22%) of UK adults plan to continue working part-time during retirement in order to fund any leisure activities.

People’s reliance on the state pension in retirement could in part be down to a lack of financial planning earlier in life. The survey highlights that more than a quarter of all UK adults (28%) who say they plan to retire have not started planning for it yet.

When it comes to planning financially for retirement, women are less prudent than men. Nearly a third (31%) of women planning to retire admit they have not yet started putting money aside to finance their retirement compared to nearly a quarter (24%) of men.While it is not surprising that nearly two thirds (64%) of 18 to 24 year olds have yet to start thinking about their retirement plans, astonishingly nearly one in four UK adults aged between 45 and 54 (24%) have yet to start making any financial provision for their retirement years.

Rob Angus, Nationwide’s head of protection & investments, comments:

“Our research suggests a misguided view that the basic state pension will be sufficient to fund life in retirement. If that is their only source of income, retired people are unlikely to have enough to achieve the lifestyle that they hope for.

“One in five people also admit they plan to continue working during retirement. However, as most people are unlikely to work forever, they cannot generate income for themselves forever.

“This is why planning and saving for retirement is vital. In fact, it is one of the most important financial steps people will ever make, which is why it is concerning that around one quarter of UK adults have not started planning for retirement. It is certainly something that can never be started too early. The longer it is left, the more disastrous the outcome for people’s finances and the tougher those older years are likely to become.”