Half of people are worried about running out of money in retirement

• Scotland has the highest proportion of people worried about their pension pot 
• A third of over-65s think they might run out of money during retirement 
• Older couples need £43,100 for a ‘moderate’ lifestyle, an industry report says 

As many as 48 per cent of people are worried that their pension savings won’t be enough to last them through retirement, a report claims.

And some 56 per cent said they haven’t squirrelled away enough money for retirement, according to research from Investec Wealth & Investment.

Women proved more worried than men, with 61 per cent reporting concerns, compared with 53 per cent of men.

While older people were the least likely to worry, a third of over-65s think they might run out of money during their retirement.

Of the over-65s that said they weren’t worried, 43 per cent have a final salary pension.

Being part of a final salary – also known as defined benefit – scheme means that you are guaranteed a secure income from your previous employer based on the salary you earned, and your years signed up to it. 

But these schemes are now mostly closed to new entrants unless you work in the public sector. Defined contribution pensions, now prevalent in the private sector, take payments from both employer and employee and invest them to provide a pot of money at retirement. But they are stingier and savers bear the investment risk, rather than employers.

Among those aged between 45 and 54, a whopping 70 per cent reported concern with the current size of their pension pot, making them the most worried about their retirement.

Under-45s aren’t far behind, however, with 67 per cent worried that they don’t have enough for retirement, and 57 per cent fearing that they will run out of money during retirement.

In Scotland, 68 per cent said they are worried about not having enough money for retirement, while 62 per cent of Scots are also concerned they will run out of money during their retirement.

The south east also proved high on the list, with 64 per cent concerned that they don’t have enough, and 57 per cent fearing that their pension will run out.

Only in the east of England and in Yorkshire & the Humber were there majorities who said they aren’t worried about not saving enough.

Ade Babatunde, chartered financial planner at Investec, said: ‘It is worrying to see the high numbers of people with retirement savings who are worried about running out of money in retirement and not having enough money saved.’

‘Some of it may be explained by people worrying ahead of their actual retirement and that is a good thing if it encourages them to save more and to seek professional financial advice.

‘Ideally people should save as much as possible for as long as possible and we would urge anyone concerned about retirement savings to talk to a financial adviser.’

Just one in five new retirees can afford to top up their state pension for a yearly income of £31,300, the amount needed for a ‘moderate’ lifestyle, compared with one in three a year ago, according to the Pension and Lifetime Saving Association.

Will you be able to afford the retirement you want? 

The cost of a comfortable retirement has jumped over the past year – but what do you need to get one and will you get there? 

As the Pension and Lifetime Savings Association updates its look at how much income people need for a basic, moderate or comfortable retirement, the This is Money podcast takes a look at what this all means for you. 

Press play to listen to the episode on the player above, or listen (and please subscribe and review us if you like the podcast) at Apple Podcasts,  Audioboom, YouTube and Spotify or visit our This is Money Podcast page. 

The income required for pensioners to lead this lifestyle has risen by 27 per cent over the last year, with a couple now needing £43,100, compared with £34,000 last year.

The PLSA income figures do not include tax, or the cost of housing – if you still rent or have a mortgage – or care. 

Based on Investec’s research, 77 per cent of retirees have reported a fall in their monthly income since ending their career, with a fall of more than 50 oer cent for a quarter of retirees.

Meanwhile, 67 per cent of those yet to retire said they expect their earnings to fall, with just four per cent anticipating an increase.

Is it too late to boost your pension?

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, suggests first working out what kind of lifestyle you want to have, and then how much you will need to fund that.

‘Figures such as the PLSA’s retirement income standards are useful as a starting point but everyone has a different idea of what they want their retirement to be so costs vary,’ she told This is Money.

At this point, you will be able to work out if your pension is in line with where it needs to be. Morrissey said: ‘Pension calculators can be hugely useful in helping you work out what you are on track to receive and the potential impact of putting a bit more away. Using these regularly can really help you keep on track.’

If you think that your pension is behind where you want it to be, there are options to help you increase it ahead of your retirement.

Morrissey suggests increasing payments into your pension: ‘Take the opportunity to boost contributions wherever you can – for instance if you get a pay increase or new job. It’s easier to do this before you get used to having the extra money and spending it.

‘If you increase your pension contribution, it is possible that your employer will have a contribution matching policy that can help to add to your pot without you having to do all of the hard work.

‘Engaging with your pension throughout your working life and taking these actions where possible can take a lot of the fear factor out of pensions and help you plan ahead with more confidence,’ Morrissey said.

How to sort out your pension if you fear it’s falling short

1) If you are worried about whether you will have saved enough, investigate your existing pensions. Broadly speaking, you need to ask schemes the following questions.

– The current fund value.

– The current transfer value – because there might be a penalty to move.

– Whether the pension is in a final salary or defined contribution scheme. Defined contribution pensions take contributions from both employer and employee and invest them to provide a pot of money at retirement. 

Unless you work in the public sector, they have now mostly replaced more generous gold-plated defined benefit – career average or final salary – pensions, which provide a guaranteed income after retirement until you die. 

Defined contribution pensions are stingier and savers bear the investment risk, rather than employers. 

– If there are any guarantees – for instance, a guaranteed annuity rate – and if you would lose them if you moved the fund.

– The pension projection at retirement age. You can use a pension calculator to see if you will have enough – these are widely available online.

2) You should add the forecast figures to what you anticipate getting in state pension, which is currently £203.85 a week or around £10,600 a year if you qualify for the full new rate. Get a state pension forecast here.

3) If you are tempted to merge your old pensions, read our guide first to ensure you won’t be penalised.

4) If you have lost track of old pots, the Government’s free pension tracing service is here. 

Take care if you do an online search for the Pension Tracing Service as many companies using similar names will pop up in the results.

These will also offer to look for your pension, but try to charge or flog you other services, and could be fraudulent.