The vast majority of those approaching retirement say simplifying their finances is a priority, says Standard Life.
Research published by Standard Life’s Centre for the Future of Retirement found that 90% of those aged 55-70 with a defined contribution pension and yet to retire want to have their finances as simple and straightforward as possible before retiring.
More than half (54%) of all those aged 55-70 with a DC pension also view retirement as an opportunity to reset their finances.
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: “The thought of retiring, and the process of doing so, can bring up strong emotions, and these feelings often shape how people manage their finances. For many, there’s a powerful desire to enter retirement free from debt, which can heavily influence the decisions they make.”
Four in five (81%) of those surveyed say paying off debts is important before retiring. Among mortgage holders, the findings showed 73% worry about having one in retirement and 68% of those yet to retire say paying off their mortgage is a priority.
Standard Life said the desire to be debt-free is driving major pension drawdown decisions, with a quarter (24%) of those who took a tax-free lump sum doing so to clear or reduce debts.
Foot said: “Unlike previous generations who had the simplicity and certainty of a Defined Benefit pension, these DC retirees need to make active decisions about how to make the most of their money.
“Regulation and the industry’s ability to support people through this period is beginning to catch up with the introduction of new innovations such as Targeted Support and plans for Guided Retirement. These initiatives will help providers suggest potential courses of action or offer people a retirement income option that reflects the range of their needs.”
Separately, the research found that retirement finances and pensions in particular generate mixed feelings among those around retirement age. While it found that there is a degree of trepidation, respondents tended towards optimism. On pension decision making, 50% feel confident, compared to a third (34%) who feel confused, while 58% feel hopeful compared to 33% who feel scared.
Main image: brett-jordan-ofpr9Cw8Rj8-unsplash
