- Over 55s knowledge of retirement funding options is extremely low, despite it being one of life’s biggest financial milestones
- Majority of over 55s don’t know about products such as enhanced annuities (82%), lump sum lifetime mortgages (78%) or retirement interest only mortgages (76%)
- Majority (56%) say they don’t know how much state pension they will receive
- Half of 55-70-year-old (50%) still working have not even done the most basic research on their retirement funding options
Research from OneFamily has revealed that the majority of workers over 55 aren’t aware of the different options for funding retirement. While pensions awareness is high (92%), other options, which may be more suitable for their personal needs, aren’t even on their radar.
Two thirds (62%) have either never heard of or don’t understand income drawdown, half (50%) say the same for annuities, and the vast majority (82%) don’t know about enhanced annuities. The low knowledge of products such as annuities could stem from the fact that since pension freedoms in 2014, they are no longer compulsory. Whilst not mandatory, annuities could still be a helpful retirement option for many.
While more than two thirds (70%) say they know what equity release is, when asked about the product names lifetime mortgages and home reversion plans, 79 per cent and 88 per cent respectively said that they either hadn’t heard of them or didn’t know what they were. Retirement interest only mortgages are also low profile with under a quarter (23%) of over 55s knowing what it is.
As well as being unsure of the options for their retirement funding, over half (56%) say they don’t know how much state pension they can expect to receive. Further to this, a quarter (26%) are not aware that the amount of state pension they will receive is dependent on how many years of national insurance contributions they have, with 14 per cent understanding the state pension is a set amount for everyone to claim aged 65 and over.
Even more troubling is that half of over 55s (56%) have not spoken to anyone or even researched their retirement funding options.
Nici Audhlam-Gardiner, Managing Director of Lifetime Mortgages comments:
“As life expectancy has risen, pensions have become more stretched, so it is vital that those planning their retirement understand all of the options available to them. Over 55s may believe that the only option they have is to rely on meagre pension savings or the state pension, and they won’t have considered options such as lifetime mortgages, which could mean the difference between a comfortable or financially difficult retirement.
““As providers and advisers offering financial products, we need to help over 55s understand all the different options available to them, and ensure they choose the best mix of solutions for the retirement they want.”
To read more about lifetime mortgages visit: onefamily.com/equity-release/