According to 44% of people living in Britain pensions are not considered to be sufficient to fund retirement. Which means one sixth or us will be reliant on inheritance, the average of which is just £45,000, to provide an income after we stop working. This works out at less than £3,000 per year.
A third of us will rely on cash savings, with a further 10% believing that they will need to release some equity from their home to boost their pension payments. Recently it was revealed that £424m had been released from properties by their owners during the first six months of the year in order for owners to fund their retirement. According to the figures which were collated by Baring Asset Management, 25% of us have no idea how we will fund our retirements.
Chief investment officer at Barings, Marino Valensise, has said he is very surprised to see how varied funding sources for retirement have become for people in the UK. He said that diversification is important to best-practice asset management however he questions the suitability of some sources, such as relying on inheritance. Almost half of the UK adult population say they have no formal pension at all.
Director General of Saga, Ros Altmann, says that because pensions failed to deliver what was expected and income from savings had fallen so much a lot of older people do not have many options for finding money. As people are living longer the day when their children inherit the family home is being delayed.
Many are deciding to release some of the capital in their homes now instead of waiting for an inheritance. The Ros concludes that people do not want their family to be desperately waiting for them to die so they can get their hands on some money.