A poll has revealed more than a third of all baby boomers do not know exactly how much income they are going to be able to live on in retirement and raised concerns about the pensions dashboard.
According to a survey by provider Dunstan Thomas, which polled more than 1,000 individuals between 54 and 71-years old, only one in five baby boomers can predict their retirement income.
These individuals retirement income is 40 per cent less than the 2017’s average salaries of people that have worked for more than 20 years, £23,376 and £38,719, respectively.
Based on these numbers, the 54 to 59-year-olds in this study anticipate nearly halving their income when they retire.
Gem Durham, independent financial adviser at Obsidian, said that these figures do not imply less earnings for financial advisers in the future.
She said: “With student loans, and the struggle to get onto the property ladder, I do believe that those who are now in their 30s will not have built up as much as their parents have, and that the baby boomers have done exceptionally well.”
This could imply less money to manage, she added.
However, she said “there will always be high net-worth individuals who will require advice”.
She said: “And as most IFAs are the wrong side of the business, unless there is a big influx of new blood, there will be fewer IFAs to service them, so this will hopefully make up for the loss from having less money under management.”
The research also showed that one in five of 66 to 71-year-olds in the UK are still working full or part-time to supplement their retirement incomes.
The 19 per cent that are still working is made up of 8 per cent of pensioners who are completing 30 hours or more of paid work each week, while 11 per cent are working part-time (up to 29 hours) per week for money.
Looking across all baby boomers who are not yet retired, more than half already are or predict working full or part-time to supplement their retirement income beyond the state pension age of 65 years.
This is not a situation Ms Durham is familiar with, as she does not have clients who have gone back to work either full or part-time because they are struggling financially.
She said: “Perhaps this is indicative of people who seek robust advice at retirement, and not true for the population as a whole, when we also consider those who did not seek advice.
“I do have a couple of clients who have chosen to delay retirement but for those it is a lifestyle choice more than a financial one.”
The Dunstan Thomas survey also showed that 29 per cent of the individuals still do not understand pension freedom choices.
In 2015, the government introduced a radical liberalisation of the pension market, known as pension freedoms.
One in 10 baby boomers are leaving the asset selection decision-making entirely to their provider, with a view to buying an annuity from them; while 19 per cent are planning to adjust their portfolio 12-months before decumulation, which may well be too late.
Dunstan Thomas’ survey also sought reaction to the idea of the pensions dashboard, which is due to be introduced by 2019.
The plan behind the pension dashboard is to create the technology to enable savers to see all of their retirement pots in one place at the same time, giving them a greater awareness of their assets and how to plan for their retirement.
HM Treasury is in discussions with the Department for Work & Pensions to make participation in the pensions dashboard compulsory for all schemes and providers.
One in five baby boomers said they would use the dashboard to assess whether they have enough money to achieve their retirement income target.
Some 20 per cent were already in decumulation mode and wanted to work out how much can be drawn monthly out of the income drawdown plan without running out of money too quickly.
According to Adrian Boulding, director of retirement strategy at Dunstan Thomas, these findings confirm “that consumers will not take kindly to a dashboard that does not support post-retirement decumulation decision-making, as well as pre-retirement accumulation and at-retirement decision-making”.
He said: “The line between pre and post-retirement is irreversibly blurred and dashboards must reflect this.”
maria.espadinha@ft.com
