Clive Lawson, managing director of Experian, which conducted the research, said: “Without a solid understanding of the pension freedoms, it’s difficult to make an informed decision about your future.”
Financial discomfort
Around a third (30%) of over-55s are already in a financially uncomfortable position, with 44% concerned about their future financial security and 42% worried about running out of money.
Lawson said: “When we compare these figures to similar insight with younger generations (Gen Y & Gen X), we can see that financial concerns increase with age.
“No-one wants to face retirement with significant concerns about their financial future, yet the sad truth is that many are simply leaving it too late to plan.”
Radical change
The pension freedoms introduced last year by the government have radically changed how people over 55 can access their savings.
While many are likely to withdraw money early to fund holidays or alternative investments, unfortunately, the research suggests that many over-55s may be likely to withdraw money to make ends meet.
More than a third (36%) of those who plan to withdraw money early say they’ll use the funds to support their day-to-day living costs, while 27% say it will help pay off existing debt.
Spend, save, borrow
Lawson continued: “When it comes to managing your money at any stage of life, it’s important to consider how much you can afford to spend, save and borrow – both now and if your circumstances change and your income decreases, through retirement or for other reasons.
“Spiralling debt can be devastating, so take the time to understand how to use credit responsibly. There are lots of resources available to help people manage their finances at all life stages, both online and through specialist organisations.”
Target for fraud
“We encourage people considering withdrawing money from their pensions to make sure they’re fully aware of what’s involved, and – crucially – if you do choose to withdraw money early, make sure that this won’t impact your financial wellbeing in the long run,” Lawson said.
“People who do choose to withdraw lump sums early can be a lucrative target for fraudsters looking to con people into fake investments. If you choose to invest, always seek advice from a reputable independent financial adviser,” he concluded.
