By Claire West
o Fall in number of people aged 55 and older who are fully prepared for retirement
o 1.2 million people aged 55 and older 'not at all prepared' for retirement
o MGM Advantage calls for earlier retirement planning
Just 5% (299,000) of non retired British adults aged 55 and over feel 'fully prepared' for retirement, according to the latest Retirement Nation Report from MGM Advantage. This is a dramatic drop from before the recession when, in 2008, 39% felt fully prepared for the financial implications of retirement.
The retirement income specialist's annual survey also reveals that 1.2 million British adults (21%) who are 55 and older and still working do not feel at all prepared for retirement. Almost half (46%) of all adults say that they are 'not at all prepared' for retirement. Half of women (50%) who have yet to retire do not feel at all prepared for retirement compared to 42% of men.
Just seven million people (15%) have sought financial advice from a professional, while 8% have consulted their bank. 6% or 2.7 million non-retired people have sought retirement advice from their friends. When people were asked this question last year, 3% or 1.5 million people sought advice from their friends.
The report reveals that not only are people unprepared for retirement, but that many are expecting to work for longer to make ends meet. Over a third (35%) of people aged 65 and over still working expect to keep working until they are at least 71 years old, and 9% of this age group plan to be working past their 80th birthday.
Craig Fazzini-Jones, Director at MGM Advantage comments: "It is hugely worrying that so many people nearing retirement are unprepared for the financial implications of this stage of their lives. Part of the problem is that relatively few people seek professional advice before they retire, but it's crucial that people are extremely proactive in checking their finances at this time. This lack of financial planning means that more people will have to work longer to ensure that they have an adequate income in retirement."
Echoing the fact that so few people are properly prepared financially for retirement, only around a third of adults (31%), or equivalent to 14.5 million people, have built up a savings pot. This increases to 39% for those between 55 and 64 and 42% for those aged 65 and over.
Steps taken to prepare for retirement - Proportion of the adult population
Built up a savings pot 31%
Sought independent financial advice from a professional 15%
Invested in property 12%
Looked at adequate provision for spouse 11%
Referred to 'best buy' tables when purchasing financial product 10%
Spoken to a bank 8%
Sought advice from a professional at work 8%
Sought advice from a friend 6%
Downsized / sold a property 5%
Spoken to a building society 4%
Source: MGM Advantage, Retirement Nation Report 2010
Fazzini-Jones concludes, "You cannot start preparing for retirement too soon, whether that means paying into a pension, building a pot of savings or talking to a professional for advice. However, it's never too late, as even if you have not saved enough, you can still shop around for an annuity to get up to 40% more income than your pension company annuity rate. Those approaching retirement should act now and carefully review their finances taking care to choose the best annuity to make their retirement savings work hard for them. Failure to shop around using the Open Market Option could mean a difference of tens of thousands of pounds in lost income through retirement."