You are here: Home - Retirement - Retirement planning - News -

Pensions…for life, not just for Christmas

Written by:
Recent stock market volatility has left the over 50s nervous about taking any financial risk with their investments, according to the Retirement Sentiment Index from Retirement Advantage.

Two in five (39%) are unwilling to take any financial risk at all with their pension savings, a marked spike from 26% in 2017. This could store up problems for the future. A pension pot for someone aged 50 could have to last 30-40 years. There is a danger that if retirees take no investment risk (i.e. leave their pot in cash), their investment may not keep pace with inflation.

The sentiment index also showed that those willing to take a reasonable amount of risk for a good chance of a favourable return has also fallen to its lowest level since the index began three years ago – to 17% from 28% last year and 29% in 2015.

Nearly half (45%) of over 50s still consider certainty as the top priority for their retirement income. This is unchanged from last year. And 18% value instant access as the most important factor (up from 12% in 2017).

Andrew Tully, pensions technical director at Retirement Advantage, said: “Savers have been spooked by the recent market volatility which shows no signs of abating. If anything, the volatility is likely to continue, with global uncertainties permeating major economies, the prospect of interest rates rising and quantitative easing programmes being unwound.

“This is understandably not an ideal backdrop for anyone planning for their retirement, and our research paints a picture of the over 50s being ill-prepared but wanting to take risk off the table when looking at their finances.”

Tully said that hybrid products, which give retirees the certainty of an annuity as well as the benefits of investing their savings, can help limit the potential impact of shocks.

He added: “Ruling out all risk in managing pension savings may seem like a sensible idea, but retirees need to bear in mind that this may reduce the amount of money available – and therefore the retirement lifestyle they are able to afford…there is an emerging trend for people to treat their pension funds like a bank account. While the pension freedoms have opened up Pandora’s Box, we need to keep pushing the message that pensions are for life, not just for Christmas.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

  • 4 in 10 grandparents (5.8 million) give their children and grandchildren a helping hand, gifting an average of £1,4…
  • RT @YourMoneyUK: Beneficiaries of #pension transfers made while the holder was in poor #health could be hit with shock 40% inheritance #tax
  • RT @YourMoneyUK: Beneficiaries of #pension transfers made while the holder was in poor #health could be hit with shock 40% inheritance #tax
Read previous post:
Stock of the week: Wincanton

Ian Forrest, investment research analyst at The Share Centre, picks Britain’s largest logistics firm Wincanton as stock of the week.