Only half of mid-retirees confident they are on track to make their private pension last for life

New research by Aviva and Age UK has found only half (48%) are confident they are on track to make their private pension savings last for life^[1]. Just over a quarter (26%) reported feeling financially secure, with women (19%) feeling less financially secure than men (32%). The research surveyed 1,000 mid-retirees aged 65-75 who have a private pension and are on a moderate retirement income, and do not pay for financial advice or have a final salary pension over £20k per year.

The majority (83%) said an income for life from their private pension savings has become more important to them as they get older, and the same number said they would be worried if their retirement income fell - with women more likely to feel this way than men (87% compared to 79%).

Aviva, a leading pension provider, and Age UK, the expert voice on ageing, have partnered for the first time to produce an in-depth study into the financial reality faced by today’s pensioners trying to manage their pension savings and wider finances in mid-retirement, and the potential solutions for future retirees.

In a new report, Retirement Reality: Managing money in mid-retirement, Aviva and Age UK found nearly two thirds (64%) think a private pension should provide an income for life rather than functioning as a flexible savings account. However, a similar number (65%) think there is not enough support for people managing their financial needs as they age. The findings highlight a new and pressing need for regular financial reviews within retirement – and not just in the lead up to or at retirement, as is often the case currently.

This is why Aviva and Age UK are advocating for the introduction of a mid-retirement MOT.

A mid-retirement MOT could offer pensioners guidance and support while they are in retirement and would act as a financial and lifestyle review that could include a conversation about estate planning, fraud protection, access to state benefits, and managing finances if they start to experience cognitive decline.

The report also recommends that innovative ‘flex first, fix later’ retirement income solutions - blended approaches that combine pension drawdown strategies with a later-life annuity – should become the norm. The research finds these have the potential to deliver better outcomes for people approaching the later part of their life, safeguarding people against major difficulties that may lie ahead for some.

Doug Brown, CEO of Insurance, Wealth & Retirement (IWR) at Aviva, said: “Pensioners today clearly value financial security, but many seem to be sleepwalking into later retirement with a ‘set and forget’ approach to their retirement income. They are among the first retirees getting to grips with the complex decisions that come with pension freedoms and need more support to make choices that will work for the whole of their retirement years.”

Exclusive modelling for the report by the Pensions Policy Institute (PPI) shows those mid-retirees over 75-years-old who are withdrawing from a £100,000 pension pot at a rate of more than 7% are at significant risk of depleting pension pots prematurely, with a 10% withdrawal rate expected to exhaust pension pots in 13 years^[2]. For example, a 75-year-old couple with a pension savings pot worth £100,000 who withdraw from it at a rate of 10% have a 75% chance that the money will run out while one of them is still alive.

Doug Brown continued: “Choosing to withdraw a private pension at a rate of more than 7% from the age of 75 requires strict financial discipline to make that money last. There is a real danger that without the right advice and guidance in place, pension pots will run out too soon.”

“We want to help savers get ready for better retirements by ensuring pension savings last a lifetime. There is a realistic chance that future pensioners will be managing money into their 90s and beyond, facing major challenges that could include the cognitive decline that often comes with age. That’s why we are working with Age UK to consider the feasibility of a mid-retirement MOT pilot to help us understand how the industry can better support people to manage their money for a secure, fulfilling later life.”

Paul Farmer, Age UK’s CEO, said: “We frequently hear from struggling pensioners, many of whom have a small private pension of their own, about how tough they have found the last few years. Managing your pension and other finances becomes harder as you get older – especially where people have suffered a major life-change like a bereavement or a dementia diagnosis – and so it’s of vital importance that the industry, charities, Government and others can all work together to help people at this crucial point in their lives. The mid-70s is often a point where people need to take stock and think through their options. We hope this fascinating research project lays the foundations for further support and look forward to exploring the delivery of a pilot programme together.”

-ends-

References:

^1. _{Ignition House is a research consultancy specialising in market research and consulting. The report is based on an online survey Ignition House conducted with a nationally representative sample of 1,000 UK people aged 65-75 years old who hold a non-advised private pension, excluding people in receipt of state pension only and those with more than £20,000 defined benefit pension household income. Research was conducted from October to November 2024. [↑]}

_{Download the report and executive summary: Aviva and Age UK Report - Retirement Reality: Managing money in mid-retirement}

^2. _{The Pensions Policy Institute (PPI): Mortality is based on ONS 2022 based mortality projections. Investment return is assumed to be at 1.5% above the rate of OBR earnings growth rate projection. The pension owner decides on income as a proportion of the initial fund, and continues to take that monetary amount, not increasing it for inflation, or decreasing as fund runs down. In the case of the death of one member of a couple, the remaining member (inherits, if appropriate then) continues to draw down the fund at the same rate.}

_{Aviva is developing its own ‘flex first, fix later’ product called ‘Aviva Guided Retirement’. It is an innovative retirement strategy that aims to provide its workplace pension members with a sustainable income for life. It focuses on those customers taking a non-advised route into retirement. It will also help to support retirees with the complex decisions they face when it comes to retiring and will provide a guided framework that supports their changing needs throughout their retirement journey. [↑]}

_{Aviva | About Us | Insurance, Wealth & Retirement}

_{Age UK | About Us}

Enquiries:

Aviva Press Office | Kate Hurren | 07800 692 548 | katy.hurren@aviva.com

Aviva Press Office | Shelley Kernaghan | 07800 692 266 | shelley.kernaghan@aviva.com

Age UK Press Office | Anne-Marie Doohan | Liz Fairweather | 020 303 31430 | media@ageuk.org.uk

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