Nearly half of retirees (46%) in the UK do not have money set aside for any unforeseen accidents that might occur throughout their later life.
The survey by Hargreaves Lansdown, which polled 10,030 UK adults, showed that while 37% of people generally worry about their lack of savings, the figure falls to 17% for those aged 65+.
This is despite the fact that 21% believe they have more than enough set aside for emergencies, when it’s actually not, the investment platform found.
Additionally, retirees are more likely to describe themselves as financially in good shape (49%) than the rest of the population (33%).
Vulnerable
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Retirees are far more vulnerable than they think. Almost half don’t have enough savings set aside for emergencies, and more than one-in-five think they’re pretty resilient, and that they have plenty of savings, when in fact their safety net is nowhere near big enough.
“It’s easy to see why they’re more confident about their resilience than their working age counterparts. They’re more likely to have money set aside for emergencies, and they’re less likely to worry about a lack of savings. Many have also fared better financially during the crisis, especially those on a guaranteed income.
“However, this doesn’t mean they’re in the clear, because many of them don’t realise quite how much of a safety net they need at this stage in life, so almost half don’t have enough set aside for emergencies.
“Many fall horribly short, with one in 12 (8%) able to cover essential expenses for less than a month from savings, and another one in six (16%) able to cover 1-3 months’ worth.”
Building financial resilience
Hargreaves said that people should have between three to six months’ worth of essential expenses set aside and easily accessible to have a sound safety net. This is up until retirement.
Once people stop working, the sum should grow to one to three years’ worth of essential expenses, the platform said.
This is because they have to build financial resilience into their retirement planning, as they lose their earning potential.
Also, drawdown income can fluctuate and any gaps may need to be filled by cash savings, rather than eroding pension investments.
According to Hargreaves’ calculations, the average retiree living alone would need between £15,512 and £46,535 ($64,226, €54,175) in cash if they covered all their outgoings; or between £8,897 and £26,692 if they excluded non-essential expenses.
For retired couples, the figures grow to between £34,960 and £104,897 for all outgoings, and between £16,988 and £50,965 for essentials.
