A million pensioners financially rely on family and friends
One in ten pensioners are reliant to some degree on family and friends for financial assistance, according to LV=’s annual State of Retirement report.
While the findings suggest the vast majority are able to remain financially independent in retirement, those due to retire within the next 10 years are almost three times as likely to be in need.
The research also revealed how retirees are more likely to turn to someone they know rather than a professional for advice about their finances.
Six in 10 of existing pensioners took financial advice from non-professional sources such as family and friends and 72% of those approaching retirement plan to do so too.
Only a quarter of over 50s have taken or plan to take professional advice about their retirement. This is despite 45% saying the pension freedom reforms, which give over 55s unfettered access to their savings pot, are too difficult to understand without professional help.
LV= said those who seek regulated advice see the value in it, as over the last two years the number of those approaching or at retirement who felt financial advice was ‘worth the money’ has nearly doubled.
John Perks, managing director of retirement solutions at LV=, said: “A significant minority of pensioners rely on loved ones to help them financially during retirement and those approaching retirement seem to be in an even worse situation.
“Yet equally worrying is that people are also far more likely to take financial advice about retirement from friends than from a professional. Given the increasingly complex choices consumers have to face about their pensions, and with the economic impact of leaving the European Union still unknown, we believe it’s never been more important consumers have access to professional advice at retirement.”
What else are pensioners doing?
As part of LV=’s annual State of Retirement study, it looked at the common ‘states’– or typical financial situations – retirees fall into:
- Property pensioners (22% of over 65s)
These retirees rely on some value from their property to help fund their retirement – primarily through downsizing, relocating or equity release – and, for some, this is their primary asset.
- Grey-collar workers (8% of over 65s)
This segment describes those who choose to carry on working after typical retirement age (65) either through choice or necessity. The majority (87%) of those working at retirement age doing so because they want to.
- Overwhelmed (19% of over 65s)
This group relates to those confused by the number of options available to them.
- Second homeowners (7% of over 65s)
These people have second properties either as an investment or means of income, allowing them to be able to live comfortably in retirement.
- Falling short (24% of over 65s)
These retirees worry their savings and/or pension won’t last their full retirement or allow them to have a comfortable lifestyle in their later years.
- Pension investors (9% of over 65s)
Having left work, this segment uses some of their new free time to make active decisions about their pension resources and reinvest to continue to grow their reserves.
- State pensioners (43% of over 65s)
This is the most common of the states of retirement, where the state pension provides the majority of retirement income, often supplemented by personal pensions. This segment is also the most likely to worry about having enough money in their retirement years or look to other sources for income, such as part time work.
- Defined and refined (24% of over 65s)
These people are retired on a healthy defined benefit pension, which provides a fixed income for life, allowing them to have a high standard of living in retirement.