Running out of money in retirement and coping with long-term care fees are two of the biggest worries for pension savers.
Fear of outliving pension savings haunts 42% of over 55s saving for retirement, with a similar number concerned about paying for care, says a report by pension firm Prudential.
Researchers asked more than a thousand over 55s about financial freedoms and found that 64% are still confused about how to take money from their pensions three years after the rules were introduced.
Another 82% said they didn’t want the government to change pension rules soon.
Pension freedoms have also changed the way a lot of over 55s think about their retirement finances.
Reality of pension freedoms
One in eight (12%) say they or their partner will work past retirement age.
One in 10 say they have started saving for retirement for the first time. They have also urged their partners to save more, increased their own pension contributions or restarted a lapsed policy.
Vince Smith-Hughes, a retirement income expert at Prudential, said: “The reality of pension freedoms is hitting home as consumers begin to understand that they are responsible for ensuring they have enough money to last throughout their retirement.
“The fear that they might run out of money is forcing them to take a long, hard look at how much they should be saving to ensure they have the retirement they want.
Shifting responsibility
“Pension Freedoms have in many cases shifted the responsibility for making a pension fund last throughout retirement directly onto consumers. Previously most people bought an annuity to guarantee an income for the rest of their lives. Now they can drawdown as much money as they like but the risk is that they run out of money in their lifetime.
“The fact that many over-55s are preparing to work longer and save more highlights that they recognise this risk and a responding in a rational and responsible way. The best thing most people can do to ensure a comfortable retirement is to take financial advice, while also trying to save as much as they can into a pension, especially a company-based scheme where they’ll immediately take advantage of contributions from their employer.”
