Research from Prudential highlighted concerns that recent retirees may be setting themselves up for an uncertain financial future.
Only 33% of new pensioners had set a budget for their first year of retirement, while 13% said they found living on their retirement income harder than they expected.
Few spending sprees
Despite fears that the pensions freedoms would see retirees blowing their cash on expensive purchases, fewer than one in 10 actually overspent or believe that they will overspend.
Prudential found most people striking a careful balance between rewarding themselves for years of hard work while making sure their pension savings won’t run out.
Although many had planned to have a luxury holiday (22%) or buy a car (16%), the most popular plan – among 34% of new retirees – was to not make any extravagant purchases.
The research found, however, that among those who had taken and spent a cash lump sum from their pension savings 39% felt that they had spent it wisely, while a further 19% said they had enjoyed spending the money.
Professional help
Vince Smith-Hughes, a retirement income expert at Prudential, said: “It would appear that many post-pension freedoms retirees have heeded the warnings about potentially running out of money later in life and are forgoing extravagant purchases when they first retire.
“However, even those taking a more cautious approach could be risking their income later in retirement with the initial choices they make. The pension freedoms have opened up a whole new set of possibilities for retirees, but for many people hoping to make the most of the new flexibility while also ensuring they don’t outlive their savings, the help of a professional financial adviser can be very important.”
