Two thirds (66 per cent) of retirees are unsure how to manage their retirement income, with just 12 per cent reducing their spending despite increasing life expectancy forcing retirement funds to cover a longer period, according to St. James’s Place.

The research, focusing on intergenerational wealth and retirement planning, revealed that over a quarter (26 per cent) of retirees who had already started drawing upon their funds had underestimated how much income they needed.

Two thirds of this subset also admitted they “hadn’t really thought about the level of funds available to them or did not know what to expect”. This follows recent figures from the Office for National Statistics showing an increasing life expectancy for both men and women.

Furthermore, the research found that over half of retirees (59 per cent) had though about the potential cost of care at some point in retirement, with a further 45 per cent of respondents stating that they do not have sufficient funds for these costs.

Despite this, only 6 per cent had reduced their spending to accommodate potential care costs.

St James’s Place head of pensions strategy, Claire Trott, commented: “Handling the decumulation period is just as important as planning your finances for retirement.

"With people living for longer, retirement funds for current and future retirees will be required to stretch further than ever before, especially as an increasing number of people will be relying on a defined contribution pot as their main pension provision.

"It’s clear that financial planning needs to reflect the different stages of retirement and, as part of this, the investment approach needs to adapt to funding a number of big outgoings later in life.

"Despite this, only a small proportion continue to make efforts to grow their assets whilst in retirement.”

The study also showed that just 16 per cent of retirees have a percentage of their pension invested in stocks to provide further growth.

However, this figure almost quadrupled amongst those receiving regular face-to-face advice (61 per cent).

Trott added: “It’s difficult to know when, or how much, you should withdraw from your pot, and this is where financial advice can make a real difference.

"Financial Conduct Authority data shows 48 per cent of pension plans were accessed without advice or guidance within the last financial year, but our research finds significantly more pre-retirees that receive ongoing face-to-face advice feel better prepared for retirement (64 per cent) than those that do not receive advice (29 per cent).

"Having more clarity and guidance on dealing with pension decumulation, and preparing for the entirety of retirement, will help reassure individuals and ease the pressure on finances later in life.”

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