Are Retirement Travel Plans a Thing of the Past?
It may seem a long way off, but what are your plans for retirement? Research from ISA provider True Potential Investor suggests that some of us are giving up on our post-pension dreams.
For years, a round-the-world trip has been the ultimate retirement dream. However, in a recent survey carried out by True Potential, it seems that this dream is slipping away, with just 2% of over 55s saying they’d spend their 25% tax-free lump sum from their pension on the trip.
It was a very different story for 25-34 year olds, with a quarter planning on taking the once-in-a-lifetime trip once they retire. What this underlines is a clear disparity between the age groups — perhaps over 55s have a more realistic outlook on their pension potential as they are closer to retirement age. Although hopeful, are 25-34 year olds less aware of the restrictions their pension offers?
The average UK 55 year old has a £51,446 pension pot and can access a tax-free sum of £12,900. In contrast, a round-the-world trip costs around £48,000, based on the price of a mid-range ticket on a 120-day world cruise from Miami to Miami. Not only is this almost all of the total pension pot, it’s nearly four times the average 55 year old’s tax-free amount.
In reality, based on the £12,900 amount, the 120-day trip would be cut short to just 35 days, taking them halfway across the South Pacific. For two people, the trip is even shorter — taking them from Panama Canal to California.
It’s not just attitudes to round-the-world trips that are changing. Just 10% of over 55s are planning to take regular holidays in retirement. In contrast, 34% of 25-34 year olds said the same.
As the above findings suggest, over 55s are becoming aware of the reality of their pension pots when it’s too late to make any significant changes. This should motivate young people to start contributing to their pension pots, no matter how small the amount.
We’ve already witnessed a drop in the number of 24-34 year olds who save nothing towards their pensions, down from 26% in Q2 2016 to 19% in Q3 2016. Clearly pension attitudes are moving in the right direction.
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