The research was released in a report, ‘Old Mutual Wealth’s Retirement Income Uncovered‘, and takes an in-depth look at the retirement landscape following the UK’s wide sweeping pension freedoms reforms in 2014.
The report, which surveyed 1,500 Brits between the ages of 50 to 75, concludes that the UK’s non-advised population is at risk of making expensive mistakes because of a lack of understanding.
Pension worry
A key finding of the report is that 40% of upcoming retirees were unsure of when and how to access their pension pot. While 45% were worried their pension pot would not last their retirement.
Additionally, 47% were either unaware of the pension freedom changes in 2014 or did not know how they impacted them.
Ian Browne, pensions expert at Old Mutual Wealth, said the research shows people’s finances are not as clear cut as they used to be.
“Pension freedoms have given people immense choice, but that means failure to make well-informed decisions means they could lose the opportunity to have a safe and secure retirement.,” Browne said.
“Education and knowledge of personal finance is more important than ever,” he said.
Debt decreasing
The research also found that the level of debt Brits are taking into retirement has fallen steadily since 2014. In 2017, the average debt was £31,011 (€35277, $41,529), which was £3,589 lower than 2015’s average amount of £34,600.
Despite this drop, the report said upcoming retirees are increasingly underestimating how much debt they could have in retirement. The research showed the average expected debt being £22,016, which was £8,995 lower then the actual average of £31,011.
“Worryingly, [upcoming retirees] drastically underestimate the potential level of debt they may have in retirement,” the report says.
“They are becoming increasingly reliant on the state at a time when the state is increasingly moving away from its previously mothering role of supporting the population in later life,” it says.
