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1 in 5 over-55s are worse off than expected! This is how I plan to retire rich

We’ve all heard stories of how pensioners are finding things increasingly tough when it comes to their finances. This is not just hearsay. Study after study shows how Britons are struggling to make ends meet when they finally retire. And the extent of the crisis is taking many of us by surprise.

One recent survey by Sun Life reveals perfectly how difficult citizens over the age of 55 are finding it to fund their lifestyles. Some 18% of respondents to the insurance giant’s survey feel that they are financially worse off than they expected to be at this point in their lives.

Just under half (45%) say that their finances are just about where they anticipated them to be. So this means that just 37% of respondents — or less that four out of every 10 — reckon that they are better off than they expected at this point in their lives.

The ‘cost of living’ crisis

So why exactly do those surveyed feel that they are worse off than expected? Without doubt the rising cost of living is seen as the biggest obstacle to them having enough money. Almost two-thirds (or 65%) say that this is the main reason for their light wallets.

The second most frequent headache is the impact of low interest rates which affected their level of savings. Some 44% of those over-55s cite this as a problem, Sun Life said. Meanwhile, 40% said that a lower-than-anticipated pension is to blame for their disappointing financial position. And 31% declare insufficient pay rises as a reason for their monetary misfortunes.

These are all issues that threaten to get worse because of the Covid-19 outbreak too. Some think tanks believe that the ‘triple lock’ State Pension increase guarantee should be scrapped to help the state manage the economic fallout of the pandemic. Rock-bottom interest rates are likely to remain in place too. And you can likely forget about meaningful pay rises any time soon as well.

Retirement saving and pension planning

This is how I’ll retire in comfort

So what can you do about it then? Data from the likes of Sun Life is certainly alarming. But it doesn’t mean that we all have to throw our arms in the air and panic. One way that I plan to avoid the pitfalls of a mega-low State Pension or any of those other issues is by investing in stocks and shares.

I have a Stocks and Shares ISA via which I have invested in a blend of both growth and income stocks. My funds are spread across a wide range companies so I can absorb any disappointments without suffering a huge blow to my returns. And crucially, I have tapped into shares which I can see thriving for at least another 10 years or more. Shares like Unilever and Diageo, whose beloved products sell like hotcakes in developed and emerging markets. Or Ibstock, a brickmaker which stands to gain from ambitious housebuilding targets over the next decade.

Studies have shown that share investors make an annual average return of between 8% and 10% over the long term. It’s no wonder why more and more citizens are turning to stocks-linked investment products like I have done to help them retire in comfort.

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Royston Wild owns shares of Diageo, Ibstock, and Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Diageo and Ibstock. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.