In a post-Budget survey, MGM Advantage revealed data showing the risk people are willing to take managing their own pension savings when rules over pensions come into force in 2015. 28% of the over 55s surveyed said they were not comfortable taking on the risk of managing their own pensions to provide a suitable income throughout retirement.The research shows that only 26% of the 908 adults surveyed aged 55 and over, are very comfortable managing their own pension savings, 41% are somewhat comfortable, while 5% don’t know.
A key concern for adults aged 55 and over who aren’t comfortable managing their own pension savings is the thought of running out of money. Two-thirds (69%) said running out of money in retirement is a cause for concern, while making poor choices when investing and the consequences of this were an issue for 64% of adults in this age group. One in two said budgeting for the whole of retirement is a reason to be concerned, as is assessing how long they would live and therefore need to plan for.
The reality is that with the additional freedom around choosing what level of income to take, people need to take great care in managing their income in retirement effectively. Whilst pension planning has, in theory, been made simpler in recent years, there remains a good deal of complexity. I come across many people who have more than enough capital and income for their retirement. Their problem is that they don’t know that this is the case and worry about spending. Retirement is a time when many people get to do what they want to do when they want to do it, for the first time in a long time, without family or work taking priority. So, whether you think you have enough or not, it makes sense to take some time to understand your situation.
There are a number of steps to take before retirement. Being aware of how much you spend and on what is just as important as the income side of the equation. Assessing your expenditure is a vital part of retirement planning. This doesn’t necessarily mean budgeting in the sense of watching every penny, but the insight that comes from this exercise can be enlightening to say the least!
Once you know how much you spend it becomes easier to understand how best to arrange your retirement income to support this expenditure and there’s great peace of mind to be had in knowing that you won’t run out of money, or leave too much behind!