The following is from an article called "Fear of a stock market crisis
is preying on the 'pension freedom' generation living on their investments" by Tanya
Jefferies for thisisMoney.co.uk
The cost of living, a stock
market crisis and running out of money are dominant financial concerns among
retired people, a new survey in Britain reveals.
The results of a study of
retirement attitudes among mostly well-to-do savers reflect the major
behavioural shift towards people investing their pensions to provide an income
in old age, rather than depending on guaranteed payouts from an annuity or
final salary pension.
Some 10,000 older people took
part of a survey carried out by the Interactive Investor website (II), which
probed their views on topics including wealth, inheritance and younger
generations.
II says the study blows a
hole in the cliched image of retirement that depicts a tanned, silver-haired,
smiling couple on a golf course or cruise ship.
Two-thirds of the participants
disagreed that retirement was a time of pleasure and financial worries loomed
large in the findings.
Holidays and travel, and
having more time for friends, family, hobbies and voluntary work, are all top
priorities for both men and women – but there are some big secrets too, with
half of the couples having no clue how much debt their partner has.
How to protect your
retirement income plan in troubled times. The survey made the following
findings.
Among retirees, 50 percent
are concerned about the cost of living, 42 percent about a stock market crisis,
36 percent about affording healthcare, 35 percent about running out of money,
and 24 percent about tax issues.
Meanwhile, for those yet to
retire, the top financial concern was running out of money, with 26 percent
worried about this, 23 percent about the rising cost of living, and 10 per
cent about not being able to afford social care - with stock market hazards
further down the list at 8 percent.
Leaving an inheritance was the top priority for 35 per cent overall, but 26 per cent had not written a will,
while 25 per cent had one but admitted it needed reviewing.
Some 70 per cent of retired
participants had not set up lasting power of attorney - an important legal step
allowing loved ones to take over your finances if you fall ill - rising to 88
per cent among those not yet retired.
More than half of those
surveyed did not know how much debt their partner had and almost a third didn't
know how much they earned.
But that fitted with many
running their finances at least partially apart, some 26 per cent of couples
keep separate bank accounts, whilst 18 per cent have just a joint account and
56 per cent have a combination.
The report said that 17 per
cent of women feel confident about maintaining their standard of living in
retirement, compared with 30 per cent of men.
However, men are more than
twice as likely as women to carry on working in retirement because they enjoy
it (34 per cent versus 14 per cent), while women are twice as likely to stay in
work due to financial necessity (41 per cent versus 20 per cent).
Dealing with financial issues
was considered a chore by 34 per cent of women compared with 15 per cent of
men.
Not starting a pension sooner
was the biggest financial regret for 17 per cent of participants. And among
those not yet retired, 32 per cent regret not saving enough more generally, and
12 per cent that they sat on too much cash instead of investing it.
Lifestyle goals: Having more
time for friends and family is one of the priorities for retirement
When it comes to the
generational divide, 51 per cent said younger generations have a tougher time
financially than they did, and 29 per cent thought the opposite.
But 66 percent of those
without a final salary pension - which provides a guaranteed income in old age
- have a vague or no idea about what their income in retirement will be,
compared with 44 percent of those who have one.
What does II recommend based
on its findings?
The firm is calling on the
Government to do the following.
•
Tackle inequality
early with more dedicated, joined up and resourced financial education in
schools.
•
Combat pension
inequality throughout people's lives by introducing pension ‘wake up packs’ not
just at 50, but at key life stages such as the start of a new job or birth of a
child.
•
Get
auto-enrolment working better for everyone by lowering the minimum age limit
from 22 to 18 sooner rather than later, not the mid-2020s as currently planned.
•
Change the
qualification rules for the £10,000 auto-enrolment earnings threshold to cover
people working for multiple employers, helping those - mostly women - who might
have several part-time jobs.
Launch a public education campaign aimed at
women to help kick start a savings and investment culture.
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