Huge numbers of over 55s are worried that their retirement savings will run out before they die, according to new research.
They fear they are caught in a triple trap of living longer, shrinking returns from savings and investments and an increasing cost of living.
A study by insurance provider SunLife reveals one in five over 55s feels financially worse off than they expected to be at their stage of life.
Another 40% have concerns about stretching their savings to cover their retirement, while 43% believe their cash will run out before they die.
This dire financial picture was painted from a survey of more than 1,000 homeowners aged 55 and older.
Importance of property wealth
The research disclosed that two thirds blamed increasing living costs for making them financially uncomfortable and half were disappointed about poor returns from their savings.
The company also found that property wealth is likely to play an increasingly important role in retirement.
Although the average pension pot is just over £105,000, the over 55s surveyed had an average £280,000 equity in their homes – with 80% ready to look at freeing up some of the cash to spend and a third consider doing this with equity release.
SunLife’sCEO Dean Lamble said: “There has never been a better time to retire – we’re living longer, enjoying healthier, more active lifestyles, and thanks to the new flexible rules around pensions, we have more freedom to spend our pension savings as we choose.
“But with the average pension pot of someone over 55 around £105,000, many don’t want to take out a lump sum and so reduce their pension income further, and people are clearly worried that they haven’t got a big enough pension to fund their retirement.”
Spending inheritances
He explained the average equity releaseamount is £101,000 – almost equal to the average pension savings of someone over 55.
“We know people over 55 want a cash fund for many reasons – whether to pay for home improvements, pay off a mortgage or just have more money to live on each month. Our research shows 90% of younger people don’t think their parents are spending too much of their inheritance and that only one in five is relying on an inheritance,” said Lamble.
“So, it’s perhaps not surprising that our research shows that less than half of people over 55 are planning on leaving their house as in inheritance. Instead they are realising the potential of an asset that’s risen in value markedly over the years by turning to equity release.”
