A new survey has highlighted just how many people in their 50’s are failing to plan for their retirement.
The joint report, by the National Association of Pension Funds (NAPF) and the Institute for Fiscal Studies (IFS) found that a staggering 60% of people, who are still in work, have not yet thought about how long they will be retired for or how they will finance this period of their life.
Equally worryingly, the report found that one third of people aged between 52 and 64, have no idea what income their workplace pension will provide.
On track for retirement goals?
The research found that both men and women are underestimating the life expectancy, with men believing they would live until 83 and women 84, when the current trends indicate they will live until 85 and 88.
The findings, especially the underestimating of life expectancy, coupled with the fact most people are not saving enough for their retirement, could mean that many would-be retirees are not on track to meet their retirement goals, resulting in lower incomes in retirement or indeed potentially meaning longer working lives.
Joanne Segars, Chief Executive of the NAPF, said: “Fortunately, people are going to live longer than they think, but they are not planning for it, so they might find their savings and pension do not stretch far enough.”
She continued: “Millions of people are within a decade of their State Pension but have still not thought about how long their retirement might last. It’s worrying that so many over-50s are sleepwalking into their old age and are expecting to be better off than they will be. It does not help that the Annuity market has become so tough.”
Recent research has shown that Annuity rates have fallen by around 20% over the past four years, with the rate accelerating in 2012 as the effect of lower gilt yields and the EU gender directive are felt.
Financial experts point out that consistently reviewing the income that you will receive in retirement is crucial.
Most retirees have income from a variety of sources, including private pensions, work place pensions, and the State Pension, as well as other savings and investments. Reviewing these can be complex, but is necessary if you are to stay on track with your retirement planning.
Many things can affect the income a pension, or indeed other investment will provide, including the amount invested, charges, performance and taxation. Most experts suggest that all of these factors should be reviewed on a regular basis, at least once a year.
Our team of Independent Financial Advisers in Nottingham are experienced in developing retirement income strategies for clients the length and breadth of the UK. If you are approaching retirement and would like advice on your options call one of our IFAs today on 0115 933 8433, alternatively enquire online or email firstname.lastname@example.org