The pension reforms were met with much fanfare and anticipation, with many of those who were close to retirement having clear ideas about what they'd do when the freedoms came into force. The question is, did they stick to them? According to research from Avacade Future Solutions, many people didn't.
The figures show that 73% of eligible savers aged 55+ have chosen not to withdraw any funds since the freedoms became available, despite the fact that 60.4% of the same survey sample intended to do so before the reforms went live. In fact, just 9% of respondents have so far taken advantage of the freedoms and have made a cash withdrawal, revealing a clear disparity between savers' intentions and their actions in the wake of the reforms.
This isn't the only area where retirees have changed their minds, either. For example, 21% of those who originally intended to take a cash lump sum planned to put the money into a savings account, while only 3% have actually done so. A further 13% planned to go on holiday while the same amount planned to invest the money in something other than property, goals that only 2% have stuck to, while 9% planned to invest in property or pay off the mortgage – but only 1% have managed to do it.
This all highlights a lack of consumer confidence in and understanding of the changes as many are cautious about taking the plunge, but perhaps even more worrying is the finding that 18% of pensioners surveyed don't have a financial plan and are unsure about the best action to take, something that could have serious long-term consequences. Many simply don't know how to best achieve their retirement objectives and the freedoms could have made things even more confusing, which is why it's so important to seek suitable advice.
Whether it's through Pension Wise, an independent adviser or (ideally) a combination of the two, it's vital to know what your options are when it comes to securing a retirement income. It's a decision that could determine the income you receive for the rest of your life, so doesn't it make sense to choose wisely? Even if your initial idea was to withdraw your entire pot as cash, you don't have to stick to it, so make sure you understand the full implications of pension freedoms and the options available to be confident that you're making the best decision for your needs.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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