Personal PensionMay 26 2016

Biggest long term worry is running out of cash in retirement

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Biggest long term worry is running out of cash in retirement

Research amongst retail investors by Alliance Trust Savings has found the single biggest long-term financial worry is that their savings will not be enough to see them through retirement.

In a survey of more than 1,000 retail investors, Alliance Trust Savings asked what investors’ single biggest worry about their long term financial future was.

Almost a quarter - 23 per cent - said not having enough money, while a further fifth - 19 per cent said their health and funding care.

For 9 per cent of respondents the risk of high inflation impacting savings was a major concern, while 6 per cent feared government meddling in the form of further changes to pensions or taxation.

A total of 8 per cent had no concerns at all about their financial future.

More than half of respondents - 54 per cent - said they understood the choices available for their personal pension pot and a further 35 per cent said they know a bit about the choices available, but needed to do some more research.

Only 5 per cent felt completely clueless about pension freedoms.

Additionally, results from the survey suggest that investors are sensible in their plans for their pension pots, with three quarters -75 per cent - stating their first priority when accessing their savings was funding retirement.

A total of 7 per cent planned to set aside money for care and 3 per cent expected to pay off debt, while 2 per cent prioritised splashing their cash on a new car, house or holiday of a lifetime.

Brian Davidson, senior pension proposition manager at Alliance Trust Savings, said: “As we’re all living longer, planning how to fund our lifestyle once we’ve finished working is a serious consideration, especially as the pension landscape has moved away from state provision and corporate final salary schemes to place more emphasis on individual responsibility through personal and employer contributions.

“It is encouraging to find that the majority of investors are aware of the pension freedom changes but even with the new flexibility over access, continue to earmark their pension pots for their financial needs in retirement.”

Colin Rodger, director at Alexander Sloan Financial Planning said he agreed running out of cash is a major concern.

“Auto-enrolment into workplace pension schemes will help in the longer run.

“As it is a success and there has been such a high take up perhaps the government could start paving the way to increasing the minimum contributions, so that there is a better chance of building up a bigger pension fund.”

ruth.gillbe@ft.com