According to data from life insurance and retirement specialists, LV=, 60% of adults surveyed in its Wealth and Wellbeing research programme, over the age of 50, think they’ll struggle financially in retirement. Moreover, more than 6 out of 10 people (61%) admit they don’t know how they’ll avoid running out of money when they give up work.
These findings form part of wider research from LV= within its research programme and paint a revealing picture of the nation’s view on retirement.
The research comes at a time when the pensions industry body, The Pensions and Lifetime Savings Association, calculates that the annual cost of enjoying a moderate standard of living in retirement has risen by £8,000 from £23,300 to £31,300 in the last 12 months, driven by higher living expenses and greater lifestyle expectations. That’s only £3,663 less than the £34,963 average annual salary for a full-time worker in the UK.
From cutting back on living expenses to better retirement planning, there are many ways people can boost their income and make their money go further when they retire such as using a financial adviser to make sure they are making the most of the resources available to them.
However, data from LV=’s research shows that despite needing more money for a moderate standard of living in retirement, 83% of non-retired people don’t know the current State Pension amount. Similarly, only 6% of people over 55 feel they know a lot about lifetime annuities. Additionally, 22 million working people haven’t heard of smoothed fund investments.
Overall, the data reveals that large proportions of men and women approaching State Pension age are putting their retirement plans at risk because they don’t know how different financial decisions could impact their future and are unaware of the options available to them. This knowledge gap threatens to negatively impact their retirement plans and make it harder to keep pace with the increasing income required to achieve moderate living standards in retirement.
The survey also shows that only 3% of working people over 50 expected to be very comfortable or quite comfortable (37%) in retirement, compared to 60% who expect to struggle, a bit (41%) or struggle a lot (19%).
The underlying theme of the data on the nation’s look on retirement shows a significant portion of the UK population (41%) are underprepared for old age, so much so that 41% of those currently retired say they’d struggle to pay for an unexpected £500 bill.
Marc Perry, Advice and Consumer Channel Director at LV= said: “To help improve the retirement knowledge gap, it’s important that we all do our part to inform and educate our members and customers. As well as providing non-judgmental retirement advice for over 25 years, we’ve also been sharing our research, such as this Wealth and Wellbeing data, to share public sentiment that may otherwise go unnoticed.
“We have a responsibility to our members, financial advisers, and customers to conduct research that helps us understand the public’s hopes and concerns. As a responsible mutual, we share our research openly so it can inform public discourse and support relevant policy making.”
