Will you have enough money to live on, when you retire? With news of changes to pension regulation surfacing earlier this year, it’s been interesting to get some forthright views on what’s changing and how those changes are affecting people.
How much is ‘enough’?
We’ve spoken to an audience of over-55s recently, to get their opinions on current pension pots and related income in retirement. Although people with an income of £1,800 or more a month at the moment seem more sure about their pension provisions being adequate, there’s still some uncertainty about how much money will be ‘enough’ money, when the time comes.
The fact of the matter is that, even with the guarantees offered by products like annuities, retirement income may not be an easy thing to gauge if you don’t know how long that retirement will last. In fact, over a quarter (27%) of the people we spoke to said they still weren’t sure if their pension pot would provide enough money for a comfortable lifestyle, once they reached retirement.
Having said that, over half (52%) were confident they would have enough, which leaves 17% of the people we spoke to predicting a shortfall in income. Why is that? Well, in contrast to a landscape where property prices are rising and people feel they’re able to spend more today, generally, as the economy bounces back, there are a number of factors being blamed, none of which can be influenced by the individuals themselves very easily: low salaries, the economic climate, and unexpected expenses. What can be affected though, in the transition from employment to retirement, is lifestyle.
Looking forward to cutting back?
Of the people we spoke to, 45% were prepared to cut back on eating out when they retired; 40% would buy fewer gifts for themselves and for family members, and 36% said that holidays and hobbies would have to go, when they reached retirement. That’s a contradiction to what you’d expect perhaps, in terms of taking it easy, finding pleasure in pastimes or travelling even, with time on your hands.
Less of a surprise though, were responses showing that almost half of the people we spoke to (48%) didn’t want to give up their current homes. It’s an interesting dilemma: having worked hard to pay off a mortgage, it may feel strange to contemplate releasing that equity in exchange for a regular income – although that’s exactly what equity release could do for you, if it’s an appropriate product for your circumstances.
Turning to doubts about how far pension savings will stretch, our audience were concerned about the onset of ill health. Dementia (which has had a higher profile in recent years), was a worry for 50% of our survey respondents. Over 36% worried about being too dependent on others, and 30% of the people we spoke to worried about going into a care home.
However, it’s not all bad news. In our Autumn 2014 Real Retirement Report, you’ll find more insights to the views of over-55s, and their thoughts on what the future holds. Over half, 55% in fact, believed recent changes to pension legislation (more flexible access to pension savings in the future), wouldn’t be an issue. With careful planning – considering equity release, perhaps; looking to get the best possible annuity from a pension pot, or just increasing the contributions being made into a pension now – it looks as though many people are still looking forward to a long and comfortable retirement.
For more details about the opinions of over-55s, their views on changes to pension regulation and how it may affect them, download a full copy of our Autumn 2014 Retirement Report.