Just one in 10 overspending post pension freedoms – Prudential

Just one in 10 pensioners admit to overspending in retirement since the launch of pension freedoms, Prudential has found.

The survey, which questioned over 1,000 adults aged over 55, also found that nearly four out of five say they have used their lump sums wisely, destroying the “myth” that people are careless with their pension pots.

Of those who said they spent their retirement income wisely, 25 per cent used the money to pay off debts, while only 6 per cent said they withdrew more than the tax-free 25 per cent lump sum.

Commenting on the research, Prudential retirement income expert, Vince Smith-Hughes, said: “This research destroys the myth that people would generally be reckless with their retirement funds. Most people are being very sensible with their choices."

According to Smith-Hughes, this is the opposite to what critics predicted and believes it is confirmation that people can be trusted with their own money.

Furthermore, just 16 per cent used their money to help their children buy a house, while 8 per cent helped their grandchildren with education costs.

Despite this, 24 per cent of those surveyed say they have found it tough on retirement income for the last three years, while just 50 per cent have set a budget, the research found that the longer people have been retired the less likely they are to budget.

“The big challenge for people retiring is making sure that their money lasts the rest of their life and it is encouraging that people are taking a responsible attitude to pension freedoms.

“However, retired people need a clear idea of how much money they will need and how long their retirement fund is likely to last. The best way for most people to do that is consult a financial adviser", Smith-Hughes added.

Prudential said that a 65-year-old with a £150,000 fund taking £9,000 a year can expect their money to last until their 101st birthday, with annual growth of 5 per cent.

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