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30% of over-55s 'already financially uncomfortable ahead of retirement'

Published 08/06/2016

Experian found that 30% of people aged over 55 say they are already in a financially uncomfortable position
Experian found that 30% of people aged over 55 say they are already in a financially uncomfortable position

Nearly one in three over-55s describe their financial situation as "uncomfortable" and two-fifths worry about running out of cash in their retirement, a survey has found.

The research, by credit checking company Experian, suggests many people may use the new pension freedoms just to make ends meet.

Experian found that 30% of people aged over 55 say they are already in a financially uncomfortable position, and 42% are worried about running out of money in retirement. Some 44% are concerned about their future financial security.

In April last year, new pension freedoms were introduced which give over-55s a much wider range of choices over how they use their pension pot, rather than being required to buy a retirement income called an annuity.

About one in six (16%) over-55s surveyed are likely to withdraw some money from their pension pot early, before they reach retirement age. More than one in three (36%) considering doing this plan to use the cash to support day-to-day living costs, while 27% plan to pay off debts.

Clive Lawson, managing director at Experian, said: "No-one wants to face retirement with significant concerns about their financial future, yet the sad truth is that many are simply leaving it too late to plan."

He continued: "When it comes to managing your money at any stage of life, it's important to consider how much you can afford to spend, save and borrow - both now and if your circumstances change and your income decreases, through retirement or for other reasons."

Experian suggested that people managing their money in or near retirement should make use of online budgeting tools or visit bodies like Citizens Advice to get help. The Government-backed Pension Wise service helps people make the most of the retirement freedoms.

With many over-55s supporting younger generations financially, Experian also said people should ensure they realistically have the flexibility in their own finances to do so, and that their own financial wellbeing will not suffer.

People should also watch out for fraudsters targeting those hoping to use the pension freedoms, Experian said.

Its research found 15% of over-55s admit they do not understand what the financial options are as a result of the pension freedoms.

The Financial Conduct Authority (FCA) recently warned that people aged over 55 are at a growing risk from investment scams involving products such as fine wines, diamonds and land, with the low interest rate environment, which has hammered savers' returns in recent years, driving the over-55s to consider investing in a wider range of products they may be unfamiliar with.

The FCA's ScamSmart campaign has warned people to be wary - and put the phone down - on cold calls from firms offering investment opportunities. Tell-tale signs of a possible scam include the caller putting pressure on someone to make a quick decision and promises of returns that sound too good to be true.

Experian surveyed more than 1,800 people aged over 55 for its research.

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