Over half of over 50s depending on the new state pension to keep them afloat in their retirement
Whether it's warnings from Waspi about women's state pension age or mutterings from MPs about how complicated the new state pension is, there's a lot of doubt floating about over what the state pension will look like in the future. However, that hasn't stopped some soon to be retirees treating it as the cornerstone of their retirement plan.
Over half (55 per cent) of those aged over 50 who are either retired or planning their retirement expect the new state pension to form part of their retirement income, despite it amounting to just roughly £8,000 a year, research released today has found.
The study by Barclays Stockbrokers also discovered that a third (33 per cent) plan on using a savings account to fund their golden years, meaning they'll miss out on various tax advantages that apply only to pension pots.
Additionally, one in five (18 per cent) over 50s confess that they feel unable to properly manage their retirement funds as they lack confidence in their investment knowledge, and 31 per cent of those who are planning for their retirement are not confident they can save up enough to support themselves.
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Meanwhile, over a third (37 per cent) of over 50s have not considered how much income they'll need to support the lifestyle they want.
"It is impossible for people to predict exactly which costs they will entail during their retirement, however it is safe to assume many will not have sufficient income to support their day-to-day spending and also set some aside for unexpected expenses," said Catherine Penney, vice president at Barclays Stockbrokers. "With the state pension amounting to just £155 per week, and the increasing scarcity of defined benefit pension schemes, pension income is likely to fall short of the amount they require.
"Not only this, but the rising age at which people become eligible for the state pension is gradually increasing and so many who are reliant upon this face the prospect of working longer than generations before them."
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The Department for Work and Pensions recently announced that it would be running a review into what state pension age should be set at, leading pension experts from Hargreaves Lansdown to warn that it could be increased into the mid-70s.
Penney continued: "It’s also apparent that people are finding financial planning and investing for retirement confusing. We have seen some steps from the government to help investors both in the form of the Financial Advice Market Review and the creation of a new pension guidance body as announced in the recent Budget.
"We encourage investors to take advantage of the resources on offer and the increased flexibility in pensions by taking responsibility for planning their own financial futures."