The over 50s are plagued with worries about their finances in retirement, according to a new report.
The main causes for their concerns are how much money they need because they do not know how long they are likely to live and a decade of low interest rates that have done little to boost their retirement savings.
The result is a ‘dangerous cocktail’ for the generation approaching retirement, says the study by The London Institute of Banking & Finance and Seven Investment Management (7IM).
Researchers spoke to over 50s with at least £50,000 in assets – including their home and pension pots.
The results revealed only half were financially ready for retirement, while 35% worried about how they would pay their bills in retirement.
Concerns about money
Because of their money concerns, 38% expect to work longer than planned and 47% admitted they need to save more money.
Despite this, the average value of assets held by the over 50s was £523,857, but this included homes they wished to leave to children or loved ones.
That proves a major financial issue as homes are typically worth at least half the value of the assets of the over 50s which they are denying spending.
Only 5% are thinking about downsizing to ease their financial woes, while 8% have thought about equity release.
One in five over 50s have taken professional financial advice although 72% realise they must sort out their finances the best they can.
Investment risk fears
Justin Urquhart Stewart of 7IM said. “Many people have been cautiously squirreling their money away into cash savings products at the time when they could have been thinking about investment risk and the power of compounding returns.
“While investment risk might not be for everyone, and we all know that stellar stock markets gains can easily be reversed, too much caution can actually cost as inflation has outstripped cash returns – something many people are worrying about themselves.
“Longevity means the over-50s need their retirement savings to stretch further than any generation before them – over 20 years for today’s 65-year-olds, on average. The findings show that the financial situation for many over-50s is far more precarious than was previously recognised.”