Today’s mass affluent face tomorrow's biggest disappointment

Tomorrow's generation of mass affluent retirees are set to face disappointment on a significant scale as over two thirds (69%) of people overestimate how much their pension fund equates to, and as such will fail to achieve their annual target level in retirement.

From a new report, Sense Check at 60, identified that 62% of mass affluent and high net worth (HNW) retirees expect an annual income of £30,000 to enjoy a fulfilling retirement, yet 40% have less than £300K saved, whilst one in three (34%) have 'only' amassed a retirement fund of between £100-£200K. In reality, a retirement fund of £600,000 is required to support this level of annual income over a 20 year period.

The report, which is based on extensive qualitative and quantitative research with over 1,000 consumers, who each have a minimum pension fund of £100,000, reveals how well prepared in essence this group regards itself, yet the income gap and reality check many will face as they reach retirement.

The findings should provide a stark wake up call to mass affluent or HNW consumers approaching retirement, to ensure their funds are efficiently managed in terms of generating income, providing guarantees and protecting against inflation. Whilst the proposed pensions legislation changes by the Coalition Government are likely to benefit the mass affluent and HNW, the decision to allow more people to avoid annuitisation brings with it the real possibility that people could exhaust most, or all of their savings before they die.

For further information on this article, please contact Jon Moore at our Darlington office.

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