South West: Surviving retirement on the state pension

5 February 2014

Around a half of adults surveyed in the South West admit they use or plan to use the basic state pension to fund post-retirement leisure activities

Whether it’s going on a round the world cruise, lazing on an exotic beach or visiting the Northern Lights, around a half (51 per cent) of adults in the South West 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 research¹ from Nationwide Building Society.

Other source of funds

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 (46 per cent of adults in the South West);
  • the cash lump sum claimed from a private pension (24 per cent);
  • an annuity (29 per cent);
  • money from property, such as rent from properties or downsizing (15 per cent)
  • inheritance from other people, such as family and friends (17 per cent)

In addition, nearly a quarter (23 per cent) of adults in the South West plan to continue or have continued working part-time during retirement in order to fund any leisure activities.

Popular retirement activities

The study reveals that seeing the Northern Lights is one of the most popular aspirations with nearly three in five (57 per cent) adults in the South West admitting they would like to visit Northern Norway.

A seven-night Northern Lights break to Lapland costs around £1,000² per person half board, including many activities such as a snowmobile ride and a husky safari. If this trip was to be funded purely from the basic state pension, it would require someone to save up their entire state pension for a minimum of nine weeks.

Forward planning

People’s reliance on the state pension in retirement could in part be down to a lack of financial planning earlier in life. Our survey highlights that, in the South West, nearly a third of people (31 per cent) who say they plan to retire have not started planning for it yet.

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.

“Nearly a quarter (23%) of people in the South West 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.”

Notes to editors:

* https://www.gov.uk/state-pension/what-youll-get

¹ All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,305 adults, of whom 170 are retired or plan to retire in the South West. Fieldwork was undertaken between 14th - 16th October 2013. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).

² As of 4 February 2014: http://www.transun.co.uk/northern-lights?depID=1678

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