Only half of mid-retirees confident their private pension will last for life

New research by Aviva and Age UK has found only half (48%) are confident they are on track to make their private pension savings last for life. Just over a quarter (26%) reported feeling financially secure, with women (19%) feeling less financially secure than men (32%). The research surveyed 1,000 mid-retirees aged 65-75 who have a private pension and are on a moderate retirement income, and do not pay for financial advice or have a final salary pension over £20k per year.

The majority (83%) said an income for life from their private pension savings has become more important to them as they get older, and the same number said they would be worried if their retirement income fell – with women more likely to feel this way than men (87% compared to 79%).

Doug Brown, CEO of Insurance, Wealth & Retirement (IWR) at Aviva, said “Pensioners today clearly value financial security, but many seem to be sleepwalking into later retirement with a ‘set and forget’ approach to their retirement income. They are among the first retirees getting to grips with the complex decisions that come with pension freedoms and need more support to make choices that will work for the whole of their retirement years.”

Exclusive modelling for the report by the Pensions Policy Institute (PPI) shows those mid-retirees over 75-years-old who are withdrawing from a £100,000 pension pot at a rate of more than 7% are at significant risk of depleting pension pots prematurely, with a 10% withdrawal rate expected to exhaust pension pots in 13 years (3). For example, a 75-year-old couple with a pension savings pot worth £100,000 who withdraw from it at a rate of 10% have a 75% chance that the money will run out while one of them is still alive.

Brown concluded “Choosing to withdraw a private pension at a rate of more than 7% from the age of 75 requires strict financial discipline to make that money last. There is a real danger that without the right advice and guidance in place, pension pots will run out too soon.”nment and others can all work together to help people at this crucial point in their lives. The mid-70s is often a point where people need to take stock and think through their options. We hope this fascinating research project lays the foundations for further support and look forward to exploring the delivery of a pilot programme together.”