Member Article

Over-55s are £11,000 worse off each year due to poor financial planning

Over a third of people only plan for a 10 to 15-year retirement, when estimates suggest the average length of retirement is actually around 25 years.

The mismatch in financial planning is leaving 55 to 64-year-olds with an average shortfall of £11,736 each year based on basic income, with 40 per cent admitting that they save just £33 a month in the lead up to retirement.

The research – compiled by independent financial adviser, Carpenter Rees – also revealed that 17 per cent of people admit to last-minute saving in the final 2-3 years before retirement. Experts have warned that even saving significant sums from a monthly salary during that period will have a limited impact on the size of a person’s retirement pot.

Mike Carpenter, director at Carpenter Rees, commented: “Statistics continue to show a steady rise in expenditure among adults over-55s, set against fluctuating levels of income for those in retirement. With half of those people admitting they wished they’d saved more on a monthly basis, over-55s are increasingly having to look at other sources of income to support their finances in later years.

“The latest statistics show that more over-65s are now receiving a wage during retirement compared with 18 months ago. It’s unsurprising that retirees are looking at alternative means to supplement their income given their poor savings history, inadequate investment performance and changes in the benefits system for people over the age of 55.”

With greater emphasis being placed on good health in later life, rather than financial planning, Carpenter has warned that more people should consider seeking financial advice at a younger age in order to avoid potential income shortfalls during retirement.

He added: “With an increasing number of over-55s wishing they’d made better use of savings products in the past, there is a clear need to raise awareness amongst those heading for retirement about the importance of planning effectively for later life – whether that’s through savings, investments, or topping up workplace pensions.”

This was posted in Bdaily's Members' News section by Mike Carpenter .