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Over-45s unprepared for future financial shocks

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More than two-fifths (42 per cent) of savers aged 45-plus have made no plans to cushion the blow of future financial shocks to their pension in retirement, according to a study.

Despite this, 85 per cent of people surveyed were concerned about the cost of financial crises when they stop work.

The MetLife research reveals the biggest concern for 45 per cent of over-45s is being able to afford long-term care if they or their partner suffer ill-health in retirement.

The figures also suggest a gender split, with 49 per cent of women saying they have not planned for potential future shocks compared to 36 per cent of men. Just 27 per cent of men are worried about making mistakes with retirement savings compared with 35 per cent.

In response to the study, MetLife has dubbed pension savers aged 45 and over the ‘Exposed Generation’.

The research suggests the ‘Exposed Generation’ expect to have retirement average savings of £125,570 when they stop work and an average retirement income of £21,700 – although more than 2.5 million – 16 per cent of over-45s – have no private pension savings.

The table below illustrates the future shocks the over-45s believe they could face in retirement and the variance in views between genders:

Potential future financial shock All Men Women
Unanticipated health or care costs 37% 31% 43%
Unanticipated home repair costs of more than £10,000 35% 30% 41%
Inflation above 4% 33% 35% 31%
At least one stock market crash 32% 37% 25%
Bailing out children 30% 29% 30%
Adapting home for old age 27% 23% 32%
House prices dropping by 5% 17% 15% 19%
Health care costs for parents 16% 16% 17%
A tax bill £5,000 higher than expected 8% 8% 9%
Divorce 5% 6% 5%
None of the above 16% 15% 17%


Dominic Grinstead, managing director of MetLife UK said: “There is a real risk the rush to take advantage of pension freedoms could leave savers facing real hardship in retirement if they are not prepared for financial and life shocks. All savers and those who are already retired are hugely vulnerable to future shocks and the research shows the over-45s are well aware of the risks but are not taking action to prepare.

“Future shocks range from the financial such as a stock market crash hitting savings to a surge in inflation hitting income to the general risks of life such as house repairs, paying for long-term care or having to bail out adult children.”

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