A report out earlier this year found that one in seven people due to retire in 2014 have no workplace or pension savings in place and will have an income of less than £8,600 a year to live on.
The survey by Prudential revealed that women are less prepared than men, with 20 per cent of women saying they have no pension savings compared to seven per cent of men. Many respondents are also unclear on how much pension they will be entitled to when they retire. Two in five said that they did not know how much their pension is worth, while 17 per cent overestimated the value by at least £880 a year.
Of course, teachers may not necessarily be in this exact position, but they are still facing financial pressures. The National Union of Teachers estimates that a teacher retiring with a £10,000 pension will lose more than £30,000 during the course of a 25-year retirement due to the government’s switch in the way that pensions are increased during retirement.
Given these threats to teachers’ pensions, pay freezes equating, according to some reports, to a one per cent drop in salary, and ongoing austerity measures, it is likely that teachers’ savings and/or ability to save is as just as impeded as anyone else’s. Certainly, demand for the money services that Teacher Support Network provides remains high.
It is clear that teachers of retirement age are worried about money. The key concerns in the last two years for teachers aged over 56 have been financial consultation, followed by anxiety.
At the same time, even a simple internet search of top worries for people retiring lists money as the number one cause of anxiety.?So what can teachers do to prepare for retirement?
Teacher Support Network asked retired teachers for tips to offer to those approaching retirement, particularly when it comes to finances. Planning was key for most of the respondents:?“Work out before you retire what your approximate income will be and expected outgoings so that you can live within your means,” said one retiree. Another explained: “We had planned financially, saving and investing, so at present we are able to enjoy a good standard of living. We continue to earn a little from exam board work and freelance translation.”
Teachers’ Pensions offers similar advice: “The sooner you familiarise yourself with your options, the more relaxed you will feel about the whole process. Even if you’ve decided you’re not ready to start planning your retirement yet, it is vital you check your service and salary details regularly to avoid any delays in the future.”
Early retirement requires just as much planning, as well as a phased approach. One of our retirees explained: “I took early retirement at 57, but went back to do two days a week. It staggered the sudden drop in salary and at that time I still felt I wanted ‘to work’. I can recommend a gradual retirement.”
Another one added: “I retired at 60, but had a phased retirement, stepping down as head of department, then to a three-day week.”
For those who do not have their own pension savings, the retired teachers we spoke to offered clear advice, with one even suggesting that “you can actually get a kick out of budgeting”.
“Live within your means and look for all the offers and deals available now you are retired – and you can travel mid-week,” suggests one.
Other advice includes “swapping money around to get the best interest”, while another adds: “Changing your lifestyle can cut down on expenses, with no impulse buying and fewer takeaways.”
One message came across very clearly from these retired teachers: “Enjoy yourself – you’ve worked hard and deserve it!” To see the full advice from retired teachers, visit our website.
Julian Stanley is chief executive of the Teacher Support Network. Visit www.teachersupport.info or call 08000 562 561 (England), 08000 855088 (Wales).