New research by Abrdn reveals that millions of retirees in the UK are relying on downsizing to a smaller property in addition to using their inheritance to finance retirement.
The research, conducted on a pool of 2,000 people, indicated that a third (33%) were planning to sell-up and move to a smaller home, and a quarter (24%) said they would rely on inheritance to help pay for their retirement.
Of those surveyed, 40% do not have a financial plan in place to forecast spending so that they will have enough cash to pay for later life, and nearly half (48%) are worried about running out of money.
In a bid to stretch finances, more than half (52%) of those surveyed said they intend to reduce their cost of living in later years.
Some respondents also said they have considered other means of income to bolster retirement funds including 31% that have entered the lottery, 28% that may return to work part-time, and 8% that may even go back to work full-time.
Colin Dyer, client director at Abrdn Financial Planning, said:
“With retirement lasting 30 years or more for many, it’s vital that people are confident that they have the funds to support them. You may have income from a number of different sources, so you need to think about how best to take it in retirement.
This is why preparation is key and taking financial advice from an expert adviser can be helpful. They can assess your income streams, any tax implications such as inheritance tax if money from a loved one is being relied on and, perhaps most importantly, explore how best to make your money last throughout your retirement years.
Further research from Hargreaves Lansdown also reveals that 8% of retirees may not be able afford their monthly outgoings when they hit retirement age, and around 11% may not have enough to pay for emergencies.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said:
“While many people feel they have a decent chance of meeting their basic day-to-day expenses when they get to retirement there are millions of people who don’t, and this is very worrying.
Worrying about being able to pay your bills or not having enough to cover an emergency cost can hugely impact your quality of life. While some retirees will be able to continue working to help them make ends meet, not everyone will be in this position and their options once in retirement can be limited.
Making even the smallest of top ups to your pension contributions at various points over your working life – for instance when you change jobs or get a pay-rise – can have a huge impact on how much your pensions are worth when it comes to retirement. If you pay more, you may also find your employer is also willing to pay in more and this can give your planning a further boost.”