More than a quarter (27%) of people approaching retirement admit that they need help understanding what their income options are – according to a new survey of workers age 50+ by WEALTH at work.
Worryingly, nearly a quarter (23%) have no idea of how much tax they will need to pay on their pension, 15% have no idea how much they can take from their retirement savings without them running out, and nearly a fifth (17%) don’t know what income drawdown is.
Interestingly, women are more likely than men to admit to needing help, with a third (33%) saying that they need help to understand their income options at retirement, compared to just over a fifth (22%) of men.
Nearly half (46%) say their employer does not provide any support to help them understand how to manage their retirement savings.
Jonathan Watts-Lay, Director, WEALTH at work, comments; “As the research shows, many people are confused about their income options at retirement, and getting it wrong at this stage could have dire consequences. This can include paying much more tax than needed or making unsuitable choices around how to convert pension savings into income. Ultimately, this could mean that once in retirement, many could run out of savings much sooner than expected.”
He adds; “Retirement planning is a specialist topic that many employees understandably don’t have the skill set for. Many leading employers are now putting support in place by providing financial education, guidance and access to regulated financial advice, to help their employees understand their retirement income options. Ideally, this should be at least 5-10 years before retirement and cover topics such as maximising tax efficiencies, how to plan for retirement, accessing retirement savings, understanding the risks, and how to seek further guidance and regulated financial advice.”