A quarter of those nearing retirement age only make crucial financial decisions two years before, research finds.
More than a quarter of the over-50s with a pension say they will only start planning their post-work finances with two years or fewer to go before retirement, according to research.
That is equal to three million soon-to-be retirees leaving this planning until the last minute, the Money and Pensions Service (MaPS) has found.
This year the highest number of people in nearly two decades will reach 55, the age savers can access their retirement pots using pension freedoms. Some 940,000 people will hit this milestone.
But the MaPS survey of people aged 50-70 with pension savings suggested they are not prepared for what is to come.
Seven in 10 have done either no, or very little, planning around retirement finances. Just 7% of the over-50s feel fully prepared for life post-work.
At the same time, the research found that more than a third of 50 to 70-year-olds reported that their finances have been impacted by the effects of the pandemic.
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Carolyn Jones, head of pensions policy and strategy at MaPS, said: “Given finances are affected by Covid-19 and we’re now facing a recession, we’re urging people not to delay or skip planning their retirement finances – whether you’re thinking of retiring later or bringing it forward.
“Getting help and talking through your options now could be the difference between having a comfortable retirement or having to work for longer or adjust to living on a lower income.”
According to the advice service’s survey, more than half of retirees agree currently unretired over-50’s should start planning their retirement finances earlier. Around 44% say that they should find out more about making the most of their pension money.
Recent retirees recommend five simple steps, in order of importance, for those coming up to retirement next to be better prepared than they were at managing their pension money:
- Save more towards your retirement
- Start planning retirement finances earlier
- Take time to decide on how you will access retirement savings
- Find out more about making the most of your pension pot
- Seek guidance on how to best organise your retirement finances
Even over-55s with a retirement plan may need to reassess their finances, as Covid-19 is forcing many to change these.
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Nearly one in five say they have decided to delay accessing their pension, according to the MaPS survey, while 14% are accessing it sooner – 10% to aid their own day-to-day finances and 4% to support a family member or friend.
Pension Wise, the government-backed, free and impartial service that is now part of MaPS, provides telephone appointments to give guidance on retirement options.
This Friday, during Pensions Awareness Week, it will also be hosting a virtual drop-in session for over-50s to ask any burning questions about their financial preparation.
Daniela Wilson, pensions guider at Pension Wise, says: “I discuss pension options with the public every day and one of the most common worries is feeling unprepared when it comes to making decisions with pension providers.
“Chatting through the different options for as little as 45 minutes has made nine in 10 of our customers feel well prepared, and this small commitment of time can help with general wellbeing as well as aiding decision making when it comes to accessing their pension pots.”
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