A RECENT in-depth study by Old Mutual Wealth has thrown up some very interesting findings on the subject of retirement income. I thought it might be of some interest to our readers if we looked at some of their findings and how this might shape attitudes to pensions moving forward.

As we approach April and the biggest changes to pension legislation in over a decade, this study looks at how much income people have in retirement, where they get it from and how it might change in future.

The study has actually come to some positive conclusions and shows a pragmatic UK who are facing up to the challenges of making their money last longer as the average expectancy of retirement is now 21 years.

It seems that people are happy to settle for 47 per cent of their pre-retirement income as opposed to the previous benchmark of two-thirds of final salary.

However, there is a 25 per cent shortfall between expected income and actual income. Those already in retirement have an average income of £19,000 while the average target is £23,700.

What the study did uncover, though, is that getting financial advice does tend to pay in the long run. Those who used a financial adviser and set targets for retirement had an average annual income of £25,000 p.a. against £17,500 without a goal.

Over 21 years of retirement, this represents an additional £157,500 of income. Retirees who took advice from a financial adviser are twice as likely to have a target income in retirement.

Of course there is more to income in retirement than just pensions. People do not simply rely on pension savings and much of the slack is taken up with ISAs and property, which have shown a 57 per cent and 27 per cent in dependency respectively.

Of course another option is to opt for semi-retirement and 30 per cent of people intend to continue working part-time. At present only 11 per cent in retirement work part-time so this does represent a huge shift in expectations. Whilst, for many, it might be a necessity to continue working, for others it is simply a lifestyle choice. They may feel too young to give up work altogether and simply want to keep busy.

There does seem to be a more realistic expectation towards income goals in retirement with those who have a goal in mind. Those with targets are 63 per cent more likely to be satisfied with their income than those who do not.

Overall, just 16 per cent of those in retirement expressed dissatisfaction with their current level of income. This statistic does tend to fly in the face of all the usual doom and gloom attached to pensions. It is clear that people are being more realistic in their expectations and are using a number of methods to generate income in retirement.

I’ll continue on this theme next week but if you have any questions or concerns about this subject please do get in touch.

You can get in touch with Billy by calling his freephone number: 0800 321 3508. Or you can reach him via the website, www.williamgeorge.info, where there is a contact page, or email him directly: w.george@ifswm.com A RECENT in-depth study by Old Mutual Wealth has thrown up some very interesting findings on the subject of retirement income. I thought it might be of some interest to our readers if we looked at some of their findings and how this might shape attitudes to pensions moving forward.

As we approach April and the biggest changes to pension legislation in over a decade, this study looks at how much income people have in retirement, where they get it from and how it might change in future.

The study has actually come to some positive conclusions and shows a pragmatic UK who are facing up to the challenges of making their money last longer as the average expectancy of retirement is now 21 years.

It seems that people are happy to settle for 47 per cent of their pre-retirement income as opposed to the previous benchmark of two-thirds of final salary.

However, there is a 25 per cent shortfall between expected income and actual income. Those already in retirement have an average income of £19,000 while the average target is £23,700.

What the study did uncover, though, is that getting financial advice does tend to pay in the long run. Those who used a financial adviser and set targets for retirement had an average annual income of £25,000 p.a. against £17,500 without a goal.

Over 21 years of retirement, this represents an additional £157,500 of income. Retirees who took advice from a financial adviser are twice as likely to have a target income in retirement.

Of course there is more to income in retirement than just pensions. People do not simply rely on pension savings and much of the slack is taken up with ISAs and property, which have shown a 57 per cent and 27 per cent in dependency respectively.

Of course another option is to opt for semi-retirement and 30 per cent of people intend to continue working part-time. At present only 11 per cent in retirement work part-time so this does represent a huge shift in expectations. Whilst, for many, it might be a necessity to continue working, for others it is simply a lifestyle choice. They may feel too young to give up work altogether and simply want to keep busy.

There does seem to be a more realistic expectation towards income goals in retirement with those who have a goal in mind. Those with targets are 63 per cent more likely to be satisfied with their income than those who do not.

Overall, just 16 per cent of those in retirement expressed dissatisfaction with their current level of income. This statistic does tend to fly in the face of all the usual doom and gloom attached to pensions. It is clear that people are being more realistic in their expectations and are using a number of methods to generate income in retirement.

I’ll continue on this theme next week but if you have any questions or concerns about this subject please do get in touch.

You can get in touch with Billy by calling his freephone number: 0800 321 3508. Or you can reach him via the website, www.williamgeorge.info, where there is a contact page, or email him directly: w.george@ifswm.com