Despite one in three (34%) of over 55s believing they will live beyond what they have saved, they remain risk averse with regards to their life savings. The research from Sanlam found that nearly a third (30%) only want low risk investments, whereas 16% would consider medium or higher risk investments.
The research also found that women are considerably more cautious than men when investing their savings during their retirement years. Nearly one in three women (30%) want to take no risk at all in retirement.
Meanwhile only 24% of men aged over 55 plan to take no risk at all with their retirement savings. One in five (20%) are prepared to take on a medium-high level of risk, to grow their investments, compared to just 14% of women.
When it comes to over 55s top investment products, the research showed nearly a quarter of men (23%) plan to invest in stocks and shares and a further 13% will invest in buy-to-let property. In comparison, only 14% of women would consider stock market investments and less than one in ten (9%) would take advantage of buy-to-let investments.
Females aged over 55 consider their pension pots to be worth approximately £52,000, in comparison to the average of £93,000 for the men. This means that not only do women have a longer amount of time to make their money last, they have a lesser pension pot to work with.
Jan Sullivan, Wealth Planner at Sanlam, said:
“As restrictions on access to pension pots have now been removed, both women and men need an investment solution that meets the risks of retirement. The cost of living, coupled with longer life expectancy, needs to be carefully considered to ensure people have enough money to last them for the rest of their lives. Unfortunately many people do not understand that the biggest risk could be to do nothing at all with their money.
“The new government, with the support of the financial planning industry, needs to do much to communicate the considerable uncertainty around the length of life to consumers, and its impact on the potential sustainability of their retirement income.”
Andy Cumming, Head of Advice at Close Brothers Asset Management, added:
“People are naturally cautious with the wealth that they have accumulated over their lives, but in the present environment, the biggest risk to funding retirement is to do nothing with it at all, or failing that, place it in low interest cash savings accounts. Longevity continues to climb - a cause for celebration in its own right - yet it means that retirement savings will need to last for longer than ever before, at a time when annuity and savings rates are bumping along the bottom. To ensure savings to do not diminish too early, consumers need to understand the benefit of staying invested, and how much risk they need to take on to be exposed to enough growth to avoid their savings dwindling early in retirement. This is where marrying a financial plan and a long-term investment strategy comes into its own.”
