Around 41 per cent of individuals over 50 identify the cost-of-living crisis as the primary obstacle to securing their desired retirement income, according to Standard Life.
According to Standard Life’s research, 11 per cent with a DC pension or SIPP consider purchasing an annuity due to the crisis. The research also reveals that 38 per cent value guaranteed lifetime income, while 34 per cent prioritise simplicity, and 32 per cent seek income stability.
The over-50s identify several obstacles preventing them from reaching their target retirement income. These include worries about future changes to state pensions, tax breaks, stock market performance, health-related early retirement, and not getting financial guidance.
Nearly 48 per cent of those over 50 anticipate their financial situation deteriorating throughout the year, while only 16 per cent expect an improvement in their personal finances.
Standard Life head of annuities Pete Cowell says: “In a cost-of-living crisis, in which every penny counts, annuities can offer what many people are looking for in retirement – certainty and security, knowing that their money will last as long as they do. The income security benefits of annuities are well-known, however, with the improvement in annuity rates, which have seen a total increase of 48% since the start of 2022, they also offer a better level of income.
Cowell adds: “While annuities can be purchased standalone, it’s also important to bear in mind that they can also work well in combination with other retirement income solutions, such as drawdown. People may opt to buy an annuity with a portion of their savings and invest the remainder, which gives people certainty about their ability to meet fixed costs. They can take some risk on the money that remains invested while maintaining flexibility over when and how they access it.
“Alternatively, buying an annuity at different stages of retirement allows people to benefit from annuity rates, which increase with age. Whatever the course of action, a mix-and-match approach suited to individual circumstances can often be an ideal way to get the best of both worlds – security in the current economic climate, but also flexibility for the future.”
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