Over-50s too optimistic on savings
The over-50s are "sleepwalking" towards their retirement by underestimating how long they will live and being overly optimistic about how well off they will be, research by pensions experts has warned.
The research, backed by the National Association of Pension Funds (NAPF), found that one in four people aged 50 to 64 would need to save more than £60,000 before they retire to achieve the income they expect, and almost two thirds (59%) had never considered how many years of retirement they might need to finance.
Meanwhile, a third (32%) of private pension holders aged 52 to 64 could not even give a rough estimate of what their pension income in retirement might be.
The report said that women aged in their 50s are underestimating their life expectancy by around four years on average compared with national projections, by putting it at around 84 rather than 88. The study of older people in England also found that men tend to think they will live to be around 83, whereas according to national forecasts they are likely to live to be 85.
Joanne Segars, chief executive of the NAPF, said: "The average saver with a defined contribution pension is being over-optimistic. They need to see their pension pot grow by almost 80% to meet their expectations. That is a huge ask if they are only a few years away from their retirement party."
She added: "Fortunately, people are going to live longer than they think, but they are not planning for it, so they might find their savings and pension do not stretch far enough.
"Millions of people are within a decade of their state pension but have still not thought about how long their retirement might last. It's worrying that so many over-50s are sleepwalking into their old age and are expecting to be better off than they will be."
The NAPF emphasised the importance of shopping around to buy an annuity, which sets the size of someone's pension income for life. The research found that, in recent years, only 28% of people bought an annuity from a provider other than the firm they hold their pension with.
A landmark Government scheme which will eventually see up to 10 million people automatically placed in workplace pensions was launched last month, starting with larger companies.