Forty per cent of pensioners who receive a lump from their pensions when they retire use the cash to pay off their mortgage or other debts.
According to the Scottish Widows UK Pensions Report 2008, 49 per cent of people still working are not saving adequately for retirement, and of those who have retired, two in five are forced to use their pension
to payoff debts rather than to enjoy themselves.
Seventeen per cent of those who received a lump sum used it to pay off their mortgage while almost a quarter used the money to pay off other debts.
“It’s a shame that some people need to spend their hard earned savings on paying off a mortgage or clearing debts. Retirement should be about enjoying life,” said Ian Naismith, head of pensions market development at Scottish Widows.
“If people take action now to start saving enough, then they will be able to make their retirement dreams and aspirations come true, avoiding what can be the reality of having to struggle to get by in later years.”
Of those who have made proper provisions, 45 per cent use their hard earned cash to go travelling once they have given up work and 27 per cent take up a new hobby with one in ten starting an evening class.
Retirees also spend more time improving their homes, with 30 per cent turning to DIY and nearly half working on their gardens.
“It is encouraging to see that so many people are enjoying themselves after they retire,” said Mr Naismith, “but it is vital that people who are still working realise the difference between wanting a good retirement and actually planning for one.”
© Fair Investment