Retirement pots tumble
The retirement pots of those aged over 50 have taken a hit as a direct result of the financial crisis, research by the Institute for Fiscal Studies (IFS) has revealed.
According to the study an average of 10 per cent has been wiped off the value of over 50s’ household gross wealth (made up of accumulated state and private pensions, housing and wealth held in liquid and illiquid financial assets) since the financial crisis; a drop equivalent to almost £60,000.
Those with more wealth have lost more proportionately, as more of their wealth has been exposed to assets that fell in price during the crisis. And according to the research this looks set to worsen; commenting, Rowena Crawford said:
“On average the richest fifth of individuals saw their household wealth fall by 13% or £162,000 – this at a stage in their life when they are most unlikely to be able to make up these losses later on. The losses occurred despite accumulated rights to defined benefit pensions being insulated from these shocks. Future generations of private sector employees will be much less able to benefit from this protection and are likely to be more exposed to asset price shocks.”
A further study from the IFS offers another cause for concern as it reveals that more than 40 per cent of over 50s are expecting their pension income to fall by at least a third upon retirement.
Meanwhile, ‘income-strapped’ retirees are more concerned with generating sufficient income in retirement than leaving an inheritance, according to research from Just Retirement. Commenting, Stephen Lowe, group director of external affairs and customer insight at Just Retirement said:
“The priority for those in the run-up to retirement is how to generate sufficient income to maintain an acceptable standard of living. Faced with depressed pension returns, inheritance becomes far less important.”
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