As the cost of living continues to rise, British adults are looking for ways to make sure their retirement income beats inflation.
New research has revealed people's top fears for retirement, and how they plan to overcome them. The survey, carried out by MGM Advantage, focussed on people aged 55 and over and not yet retired.
The number one fear for retirement in the UK is the rising cost of living, with 53% of over 55s afraid that their retirement income won't keep up with inflation. Surprisingly, cost of living concerns came out ahead of staying fit and healthy (45%) and even the loss of a spouse or partner (32%).
In an attempt to boost their retirement income and protect it from the impact of inflation, almost a third (32%) of over 55s say they intend to keep some of their savings exposed to market risk by investing in equities. The hope is that investments on the stock market will deliver higher returns than savings accounts and bonds, but this does involve an element of risk.
Changes to pension rules, coming into effect in April 2015, mean that everyone now has more control over what happens to their pension pots on retirement. However, this also means that everyone needs to be aware of the risks associated with retirement investing.
Andrew Tully, Pensions Technical Director at MGM Advantage, commented on the findings:
"Everyone’s feeling the pinch and the cost of living crisis continues to affect household budgets. It’s not surprising that people are thinking about how to ensure they have more money to live on in retirement and are considering retaining some exposure to equities.
"To maintain equity exposure in retirement while generating an income usually means using income drawdown. But, the risks associated with drawdown mean it is not for everyone, so we should exercise caution shoehorning everyone into that type of plan. For drawdown to provide sustainable income through retirement requires a high degree of exposure to equities, and therefore more risk."