Only a fifth of pension savers aged between 50 and 64 have spoken to a financial advisor about their pension, leaving many at risk of making “inadequate” preparation for retirement.
More than two thirds, at 69%, said they do not know how much money they need to save for retirement, according to a survey by The Social Market Foundation, sponsored by savings and retirement business Phoenix Group.
People aged from 50-64 are currently around £250,000 short of the amount of pension savings they need for retirement, according to the think tank’s analysis. Those surveyed expect to receive an income of £23,000 in retirement, which requires a pension pot of about £420,000, but they face a shortfall, on average, of £242,546. This adds up to a total annual savings gap of £132bn across the country for those reaching retirement age.
The introduction of pension freedom rules in 2015 opened up a much wider range of options for those retiring with defined benefit, or money purchase pensions. Although greater flexibility is welcome, it’s not always easy to decide on the right choice for you, and making a mistake could have a serious impact on your retirement income. Read more about your choices at retirement in our articles Your pension options at retirement.
Scott Corfe, research director at The Social Market Foundation, said there is a “serious” gap in the provision of pension guidance and advice for people approaching retirement.
He said: “The blunt truth about pensions is that many people don’t know enough to make the decisions that would give them the retirement they want. Poor information will mean poor outcomes for too many people.”
Find out more about how much you should be saving for retirement in our articles How much should I save for retirement? and Can you afford to retire?