Brits plan to accumulate a ‘basket’ of products and sources of income to fund their retirement, according to the latest Friends Life UK Retirement Savings Map.
Based on a survey of 7,000 people across the UK, the study by the life and pensions provider benchmarks how active people are in preparing for retirement and the types of products and sources of income being relied on.
The study found that when it comes to securing income during retirement, savers expect to use state, company and personal pensions, ISAs, stocks and shares and property. However, when people actually begin retirement, generating an income from property falls down the list as retirees heavily rely instead on pensions and existing savings.
When it comes to securing additional funds during retirement, 29% of people plan to supplement their retirement income with a savings account and 18% plan to use a cash ISA. Furthermore, 17% said they wanted to downsize or sell their property to unlock funds. However, when it comes to those actually living in retirement, only 4% have used funds from downsizing or selling their property.
Andy Briggs, group chief executive at Friends Life, said: “It’s hugely encouraging to discover that people are preparing for retirement by putting in place such a comprehensive ‘basket’ of retirement products. It demonstrates that people are aware of the need to plan ahead and to understand the options available to them so they can work out how best to secure their future.
“However, while steps are being taken, our research shows there is still a gap in understanding how much income will be needed during retirement. On average, based on current savings behaviour, people are facing a financial shortfall of nearly £100 per week during retirement. This is why it is so important to take action early to be prepared so that whether you generate income from savings, property, investment or work, your future income can be as healthy as possible.”
When it comes to saving for the long term in addition to a pension, more people in Edinburgh and Manchester than any other city plan to use savings accounts (36%) to fund their retirement.
Bristolians are most likely to prioritise inheritance as a way to supplement their retirement income (19%).
When it comes to supplementing income during retirement through selling or downsizing property, it is those in the South East (21%), who are most likely to plan this. In contrast, staying invested in the market with stocks and shares is the most popular way of generating additional retirement income both in the South East (12%) and London (12%).
16% of those in Cardiff say they will supplement their retirement income with rental income from property.