Managing your retirement income at a time of great crisis is not an ideal solution but it is the stark reality facing many people.
In the first three months of this year, the average annuity income fell by 6 per cent - its lowest level on record, while those saving for retirement saw their pension funds severely hit, according to data from Moneyfacts.
The impact of the coronavirus pandemic on the global stocks markets has resulted in the average pension fund value falling by 15.2 per cent during this period, its worst quarterly performance on record.
At the time the data was released at the end of April, Richard Eagling, head of pensions at Moneyfacts, says: “Whether it is individuals saving into a pension scheme or currently in drawdown, or retirees looking for the security of an annuity, the coronavirus pandemic has had a devastating impact on potential retirement outcomes.
“The hope is that these will prove to be short-term shocks, but for those planning for retirement now and looking for a retirement income immediately, they present unenviable challenges.”
So where now for those who are thinking about their retirement?
A recent study by Aegon found that as a result of the crisis, 18 per cent of the general population now plan to delay retirement.
One in eight (12 per cent) of those aged 55 and over who prior to the coronavirus crisis had not accessed their pension funds have now done so and a further 8 per cent have considered dipping in.
And despite being decades away from retirement age, one in five (21 per cent) of those aged 18-34 expect to delay the age of retirement, while 11 per cent of those aged 35-55 said that they plan to delay retirement.
Vince Smith-Hughes, director of specialist business support at Prudential UK, says: "We may have enjoyed a significant bull run in markets since the introduction of pension freedoms and the popularity of drawdown vastly increased, but the recent falls in markets have had a significant impact on client fund values even when you take into account the gains we’ve seen over the last few weeks."
For some people the pandemic will not have created any issues; for example members of final salary schemes for instance, and others with well-funded pension and investment accounts.
But those people whose property portfolio is their pension may be feeling less secure if they have been asked for rent holidays, while individuals who saw their business as their pension, will be facing a retirement with potentially less money, or delayed until they can sell.
Dennis Hall, chief executive of Yellowtail Financial Planning, says: “There’s a lot of uncertainty depending how you’ve been preparing for retirement.