Perhaps the single biggest issue facing the hundreds of thousands of people who retire each year is how wide the gap will be between their desired and actual retirement income and the impact that this will have on their standard of living.
Quite often this gap is due to a lack of foresight, and planning, but life events such as divorce, separation, redundancy, and ill-health can also unexpectedly de-rail retirement plans.
Many people find it difficult to picture what retirement might look like and planning for something that is hard to imagine can be challenging, to say the least. Looking forward to what life might be like, even a few months ahead, can be tricky, let alone what it might be like in the decades to come.
What is true across the board is that a fundamental underlying cause of The Gap is a wholesale lack of engagement with retirement planning and an all-too-common mindset of ‘it can wait until tomorrow’ and ‘out of sight is out of mind’.
It is expected that, as auto-enrolment pension savings build, engagement in retirement planning will improve and the long-awaited pensions dashboard that gives visibility to all pension savings under one roof, will also help.
However, these initiatives will not help those who have recently retired or are considering transitioning into retirement over the course of the next twelve months.
You can read our full article on potential solutions to the retirement income gap, with examples of how equity release and annuities may work here.