Shift in attitudes as over 50s take risk off the table due to global uncertainty (consumer)
Savers have been spooked by the recent market volatility which shows no signs of abating.
- 39% of over 50s unwilling to take any financial risk with their pension savings (up from 26% in 2017)
- 17% willing to take a reasonable amount of risk in return for a good chance of a reasonable return (down from 28% last year)
- 45% of over 50s still consider certainty as No1 priority from their retirement income (same as last year)
- While 18% value instant access as the most important factor (up from 12% in 2017)
Recent stock market volatility and continued economic uncertainty have led to a sharp spike in how many over 50s say they wouldn’t take any financial risk with their pension savings, according to new research from Retirement Advantage.
The findings are published in the firm’s latest Retirement Sentiment Index, which tracks trends in how those approaching retirement think about their finances. The report reveals that nearly four in ten (39%) over 50s say they would not take any financial risk with their pension savings – a significant increase on last year’s figure of 26%. The proportion who say they would take a reasonable amount of risk for a good chance of a favourable return has also fallen to its lowest level recorded since the Index began three years ago – to 17% from 28% last year and 29% in 2015.
Andrew Tully, pensions technical director at Retirement Advantage, said: ‘Savers have been spooked by the recent market volatility which shows no signs of abating. If anything, the volatility is likely to continue, with global uncertainties permeating major economies, the prospect of interest rates rising and quantitative easing programmes being unwound.
‘This is understandably not an ideal backdrop for anyone planning for their retirement, and our research paints a picture of the over 50s being ill-prepared but wanting to take risk off the table when looking at their finances.
‘One of the best moves anyone can take to planning for their retirement is seek advice from a professional financial adviser. For the many over 50s who now say they wouldn’t take any financial risk at all, advice can help them understand what danger these market movements actually pose to their savings, and how to mitigate it.
‘For example, there are hybrid products which give retirees the certainty of an annuity as well as the benefits of investing their savings, limiting the potential impact of shocks. Ruling out all risk in managing pension savings may seem like a sensible idea, but retirees need to bear in mind that this may reduce the amount of money available – and therefore the retirement lifestyle they are able to afford.’
Another indicator of a more wary outlook among over 50s revealed by the research is that more people than ever say having instant access to all of their pension savings is their main priority for their retirement income (an Index-high of 18%, up from 12% in 2017).
Certainty of income remains the most popular priority for retirement income, cited as the most important factor by 45% of over 50s – level with last year. The biggest fall has come in how many prioritise the flexibility of having some guaranteed income while managing the rest to generate further income (an Index-low of 28%, down from 36% last year).
Andrew Tully also said: ‘While each retiree will have their own reasons to prioritise different elements when thinking about their retirement income, there is an emerging trend for people to treat their pension funds like a bank account. While the pension freedoms have opened up Pandora’s Box, we need to keep pushing the message that pensions are for life, not just for Christmas.’
- Censuswide polling conducted online between 06/03/2018 and 09/03/2018, surveying 1,003 UK adults aged 50 and over who are not retired and have a defined contribution or individual pension in place.
- Censuswide polling conducted online between 28/06/2017 and 29/06/2017, surveying 1,005 UK adults aged 50 and over who are not retired and have a defined contribution or individual pension in place.
- YouGov polling conducted online between 20/05/2015 and 25/05/2015, and 06/08/2015-11/08/2015, with each wave surveying 1,000 UK adults aged 50+.