A new report by Dunstan Thomas has shed some worrying light on the position of millions of Baby Boomers as they head into retirement.

The report, Engaging with Baby Boomers Retirement Journeys outlines the findings on a large survey carried out this year among 71 year olds. Some 59% of those interviewed had yet to retire.

An uncertain financial outlook

Amongst the findings it reveals that only one in six (17%) of those yet to retire know exactly what retirement income to expect. In part this is because many have plans to downsize during retirement primarily to cut outgoings but also to release funds.

But the report highlights issues such as the lack of access to information, specialist financial advice and life-time mortgage products as the key barriers to helping people to make an accurate assessment of what they can expect from equity release.

A lack of choice and understanding of the choices available

29% of Boomers still don’t understand Pension Freedoms choices now open to them.

When asked how soon before retirement they would consider reviewing their pension-held investment/assets to reflect Defined Contribution (DC) pension decumulation choices (listed as encashment, purchasing an annuity or some form of income drawdown), nearly a third simply didn’t understand the new options available – again pointing to a lack of information in the marketplace.

Boomers are retiring later

The data show an increasing number of people are moving into full retirement gradually and not ending paid work for several years post-65.

Dunstan Thomas term this trend ‘semi-retirement’. We predict that this trend will only grow from here, they say, and will have widespread implications for pension policy holder communications, platforms, the future Pensions Dashboard, illustrations, retirement products and many other aspects of the retirement market.

Nearly one in five (19%) of the oldest Boomers, aged 66-71 years, were still working full or part-time to supplement their retirement incomes.

Those still to retire expect to be working post 65 for an average of 4.2 years. This means that over half of Boomers predict or have already worked (in full or part-time paid work) into their seventieth year.

…but not telling providers

However, despite clear changes in their planned retirement age, more than half (51%) of the Baby Boomers surveyed have not informed their product providers of these changes, and 49% have not received prompts to provide retirement age updates from their provider.

Planned retirement age is a key determinant of both how much savers will need to put in each year to reach retirement income goals. But just 9% of providers had invited Baby Boomers that were approaching retirement to update their predicted retirement age; while 11% of customers informed their insurer without being prompted to do so.

Meanwhile, retirement incomes are falling

According to Dunstan Thomas, Baby Boomers  overall annual pre-tax income in retirement from state and personal pensions and other investment sources is set to fall in the coming years.

Older Baby Boomers, aged 66-71 years, averaged a total retirement income of £25,323; while 60-65 year olds predicted an average of £24,089; and 54-59 year olds, presumably those most affected by the decline in Defined Benefit (DB) final salary pension penetration, predicted average retirement incomes of £20,486 per annum.

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