When you think about retirement, do you imagine a life of holidays, luxury and endless activities, or are you a bit more prudent in your aspirations? According to research from Investec Wealth & Management, an increasing number of people are shunning retirement excess and are remaining distinctly sensible, despite the pension reforms giving them the chance to withdraw their entire pot as cash if they wish.
The figures show that 63% of those approaching retirement have no intention of changing their retirement spending plans following the new freedoms, and only 15% of respondents said they will spend more as a result. In fact, the vast majority (81%) of those aged 55 to 64 who have saved regularly into a private pension are intending to take a cautious approach to funding their retirement.
This is despite 69% of respondents saying they intend to spend money on holidays and travel in the first 10 years of their retirement – arguably, something that many people hope to do when they give up work – while 36% have some of their fund earmarked for home improvements. A similar amount plan to make the most of their retirement by eating out more, while 32% have budgeted for a new car and just 5% plan to buy a second home with their pension savings – hardly a picture of reckless spending.
Nick Gartland, senior financial planning director at Investec Wealth & Investment, commented: "Despite criticisms about pension freedoms encouraging irresponsible spending, this research shows this to be far from the case. The overall message is that the next generation of retirees is approaching retirement with caution, which is hardly surprising. Improved life expectancy means that pension pots will in many cases need to finance 20 or 30 years of retirement, and that's before the added pressure of having to support their children and grandchildren with house deposits and school fees."
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