Managing Retirement Income and Savings

For many working adults, retirement is a time to look forward to, but it can equally be a source of concern, particularly with regards to money.

One of the key financial concerns people have is how best to manage their retirement savings to ensure they last for as long as is necessary.

The Government’s recent pension changes offer pensioners much greater flexibility in how to access their pension savings, but this increased flexibility also brings greater risks. A recent study by MetLife found that one of the greatest risks identified by retirement advisers is that pensioners will use their pension savings as a bank account and run out of money.

Consumers also appear to share these concerns, with a separate survey finding that 41% are worried that they will outlive their retirement income and 12% expect to have to rely on the state.

On a more positive note however, there does appear to be a growing awareness and appreciation of new measures the Government is introducing to help pensioners get a better rate of return on their savings.

Research by Saga Personal Finance found that 34% of people over the age of 65 intend to invest in pensioner bonds, which are due to launch in January next year. The average amount pensioners are expected to invest is apparently £13,876.

However, with 70% of respondents saying they have over £20,000 in savings, many pensioners will be looking for additional ways to invest their money, and ISAs appear to be an increasingly popular option.

Around 27% of over 50s report being more likely to save in an ISA following the announcement in the Autumn statement that it will be possible to transfer ISA savings to a spouse tax free following the death of the account holder.

“Many over 50s rely on interest from their savings to boost their income,” explained Jeff Bromage, chief operating officer, Saga Personal Finance. “Our research shows that they clearly appreciate the effort the Government has made to make their retirement savings work as hard for them as possible and they intend to take them up on the offer.”

“However, the investment limits on pensioner bonds means that many people will also be looking for alternative reliable homes for their money – such as ISAs to create both income now and growth to help fund the retirement of their dreams,” he added.

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