Over a third (33%) of people nearing retirement have admitted they do not feel confident that they will have enough funds to live on, despite the fact that the baby-boomers are better off than any other generation, according to a report.
The LV= Income Roulette Report revealed that more 28% of people who are expecting to retire within the next five years do not know how much they have in their pension pot.
In addition to money worries, some claimed they do not feel emotionally ready for retirement with 16% admitting they are worried they will not be as intellectually stimulated and 12% worried they will not know what to do with their time.
Steve Lewis, retirement director at LV= says: “It’s widely reported that over 55s are experiencing a golden age when it comes to their finances. Entering retirement should be an exciting time, but our research shows this doesn’t automatically mean this group is confident about their retirement plans –both from financially and emotionally.
“While, on the one hand, ‘pension freedoms’ offer people more flexibility and choice, on the other, it demands they take greater responsibility on them of their own financial affairs.
“To help, there are a range of options available from guidance to more personal tailored advice, where a financial adviser can help people be better prepared, financially and emotionally, for their retirement.
“It can also help for people to think about where their different pension pots are and if they would be better off bringing them all together in one place. This can ensure they enter retirement with confidence and control over their savings, and greater choice about how to take an income that will provide everything they hope for from retirement.”
The research also found that 42% of those who have already retired feel their financial situation has significantly worsened since doing so.
Source: LV= Income Roulette Report
Furthermore, 35% of retirees feel they are often hit with unexpected costs, such as home maintenance, car repairs, or helping their children or grandchildren – meaning they frequently find themselves financially vulnerable.
Speaking on the issue, AJ Somal, financial planner at Aurora Financial Planning, says: “I have experienced a lack of confidence for baby-boomers approaching retirement, in particular from newly referred baby-boomer clients. This could stem from a lack of financial education in this area throughout their working lives.
“For some, it may be too late to make up the shortfall in retirement funding, whereas for other clients, it would mean making larger contributions into tax efficient savings vehicles and other long-term savings to make up the shortfalls.”
Aamina Zafar is one of the UK’s leading financial journalists. She has previously worked as a senior reporter at FT’s Financial Adviser. The award-winning journalist writes regularly on the IFA community, mortgages, pensions and financial regulation.
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