Pension savers need enough money to cover health problems, says LV

Pension savers need enough money to cover health problems, says LV

11 August 2010 / by Lois Avery

Pension savers are being encouraged to put money aside to cover poor health after new research shows it’s the biggest shock for many in the first few years of retirement.

Savers are already under pressure to save enough to cover ever increasing retirement years now that the state pension age has been increased and the default retirement age of 65 has been scrapped.

But on top of day to day living new figures show that one in four will face some kind of health shock within the first five years of retirement, meaning extra savings could be vital.

Insurers LV found that 24 per cent of pensioners said their health had worsened in the first five years of retirement with 17 per cent of new retirees hit by a sudden need to support family members financially.

They have suggested that the research highlights the dangers of locking retirement income away in annuity too early to avoid any unexpected financial strain.

Factors such as new grandchildren, moving house or home improvements were also factors contributing to retirees need for flexible income.

Matt Trott, LV= Head of Annuities said: "Many people associate retirement with taking things easy and relaxing. However, it is a time when major step changes in their lifestyle can take place. It is therefore important that people build the flexibility into their retirement planning to deal with these changes. Any unexpected strain on their finances in the early years of retirement could have a significant knock-on effect further down the line.

"The majority of people currently fix themselves into an annuity product for life at the point of retirement, and while this may work for some, building in a level of financial flexibility during the early years of retirement could help them cope with surprises, whether nasty or nice."

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