One-third of retirees (33%) have concerns about being unable to meet living costs, according to research by Legal and General.
Its survey of 1,000 retirees, which was carried out in partnership with the University of Sheffield, found that 38% of retiree respondents fear unexpected expenses during retirement, and 36% are anxious about having a lower standard of living in retirement.
Almost two-thirds (62%) started planning their pension income in the final year before they retired and 72% consider financial preparation to be very important for a happy retirement. One-third (35%) said they felt financially unprepared for retirement.
Three-quarters (73%) admitted they did not understand the key pensions term annuity, while 82% did not know what a defined contribution scheme was and 74% had no understanding of the term trivial commutation.
Meanwhile, 29% did not fully understand the state pension, and 64% and 66% admitted to having limited knowledge of terms such as defined benefit or defined contribution. This increased to 92% for more complex terms such as trivial commutation.
In addition, declining health was a concern for 31% of respondents, while financial instability worried 30%.
Lorna Shah, managing director of Legal and General Retail Retirement and chief executive officer of Legal and General Home Finance, said: “At Legal and General, we believe retirement should be as stress-free as possible. We want to redefine retirement as a rewarding chapter of financial security and a fulfilling lifestyle.”
Alberto Montagnoli, professor of finance at Sheffield University, added: “There is a clear need for people to understand and prepare for their retirements better. It’s important for the financial services industry to help people understand pensions and encourage planning for retirement at all ages. Financial education and appropriate retirement planning aren’t just nice-to-haves, they’re necessities. We need to empower people to make informed decisions that will ensure they have a financially secure retirement.”
