Over a third of 58-75 year olds who are yet to retire have not calculated how much retirement income they will be able to take from their pension and investment savings.
This was more prevalent among women, with 40% not yet sure of how much retirement income their pensions will provide, versus 31% of males.
Only one in every six (17%) unretired baby boomers know exactly what they’ll be able to take, research from the Dunstan Thomas Baby Boomers’ Retirement Income study has found.
According to the technology provider, one in five of those aged 58-75 are not considering de-risking their portfolios until 12 months before retirement, and only one in ten said their pension provider arranges it automatically by assuming they will buy an annuity. However, Dunstan Thomas warned this lack of certainty around de-risking could harm people’s retirement income.
Adrian Boulding, director of retirement strategy at Dunstan Thomas, said: “The confused behaviour around de-risking and reliance on automatic life styling by providers is placing many Baby Boomers at risk of dangerously poor outcomes. It underlines the importance of an adviser that can tailor an investment approach to suit individual client situations.”
The report found that a quarter of Baby Boomers plan to or have already used regulated financial advice to gain more knowledge about pensions before they retire, while a further 15% plan to use or have already used guidance services from organisations such as Citizens Advice Bureau, MoneyHelper and Pension Wise.
The youngest segment of Boomers, aged between 58-61, were most likely to seek pensions-linked financial advice, with nearly a third (32%) having done so or planning to.
The Dunstan Thomas study also explored different options being considered for boosting retirement income levels. The study showed that 23% of Boomers had already downsized or are planning to do so to reduce their costs in retirement, while 6% have already completed an equity release exercise and a further 8% thought it was likely they would follow suit.
Dunstan Thomas said there was also growing demand for advice for inheritance tax purposes, particularly in London and the South West where 20% and 17% of Boomers respectively, are intending to seek or have already sought IHT-linked financial advice.
Boulding added: “These findings reveal a burgeoning demand for regulated financial advice amongst Boomers approaching and in retirement – particularly amongst younger Boomers more exposed to defined contribution pensions dependence for retirement income.
“There’s evidence here of Boomers’ concerns associated with assuring an adequate and sustainable retirement income, as well as de-risking of portfolios prior to retirement. There is also clear demand for IHT planning as well as advice associated with boosting available retirement income through equity release or downsizing.
“Advisers who are focused on supporting Boomers to prepare for their retirements, helping them to optimise their retirement income and leave decent legacies to their children and grandchildren are likely to be kept very busy in the next 10 years or so as the largest and arguably wealthiest generation of all time in the Western world head into full retirement.”
