- 19% of over 55’s don’t have a pension
- 78% of over 55’s aren’t aware how much they need to live comfortably when they retire
- 69% expect to be in debt once they reach their retirement
New research of the over 55’s has revealed they are dangerously unprepared for their retirement. According to the study, 78% of over 55’s are not aware how much they need to have in their pension pot to live comfortably when they retire, and incredibly 1 in 5 (19%) have no pension provisions whatsoever.
The lack of knowledge surrounding pension reforms is one of the reasons causing the over 55’s to be under prepared. 40% admit they do not know when they are able to access their pension and over half (51%) are not aware of the new state pensions reforms that came into effect in April 2016.
The Government suggests that those earning between £32,000 and £51,000 a year during their working life should aim to retire with 60% of their salary – while those earning less than £32,000 may need over 60% which is the equivalent to £19,200 per year or £369.23 per week as a minimum.
Worryingly, 89% of over 55’s are putting less than £100 into their pension pot each month and 1 in 5 (19%) of those over 55 don’t even have a pension, meaning they will be relying solely on the state pension. The state pension equates to only £8,092 per year or £155.61 per week which is less than half of what the Government recommends for retirement. This could lead to pensioners increasingly struggling to make ends meet, having to work through retirement or risk living in poverty. These fears are backed up by the research which showed that 69% of all over 55’s expect to be in debt once they reach their retirement age.
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Jason Howard from Pension Transfer Experts agrees: “Its worrying how little over 55’s are prepared for their retirement. In order to plan for retirement, building a cash-flow plan is important, because we believe it is never too early, or too late to start planning. Knowledge is power, and will enable an individual to make informed choices about their retirement to ensure that they do not run out of money, and ultimately enjoy a time in life that can be very fulfilling.”
There are many options for over 55’s when it comes to their worries about pensions. First and foremost, regular payments should be invested into the pension so that it will be large enough for the appropriate standard of living to enjoy the twilight years. The new pension reforms mean you can now take your pension in cash as opposed to buying an income for life, known as annuity, meaning there is more choice than ever before in ways to generate an income through retirement. Many people have multiple pensions, so a pension transfer can also be a viable option after a review, to ensure that it follows the right strategy depending on appetite for risk.
Jason added: “It is vital that individuals receive professional advice to ensure that they are adequately prepared for retirement. Although an individual’s financial future cannot be solved, it can be secured through sound financial planning, and understanding the role of all current plans, whether they are Defined Benefit Schemes, Money Purchase or Personal Plans and how these relate to the individual’s retirement roadmap.”