Cash strapped pre-retirees raid savings

Cash-strapped people over the age of 50 have reduced their pension savings by almost £18bn in the past 12 months, according to latest research. The annual State of Retirement report, compiled by insurer LV= , shows that one in five of those approaching retirement have decreased their retirement savings by an average of £324 a month. This is more than double the £137 average reduction in retirement savings made by 20% of over-50s last year. The report also found that fewer imminent retirees over 50 are saving sufficient amounts to maintain a comfortable lifestyle once they finish work, with one in three pinning their retirement hopes on economic recovery. The figure is even higher for the over-60s with 46% hoping for a substantial recovery in the UK to improve their retirement prospects. Women approaching retirement appear to be feeling the effects of the recession and credit crunch more, with 23% cutting their monthly retirement savings by an average of £372, or £4,464 a year. In contrast, one in five men approaching retirement have reduced their retirement savings by an average of £265 a month, or £3,180 a year. LV=, the UK's biggest friendly society, has urged tomorrow's retirees to look at alternatives to boost their income. Ray Chinn, head of pensions at LV=, said: "Britain's over-50s have already seen their pension pots damaged by the economic crisis, and now many appear to be diverting still more money away from retirement saving to deal with immediate pressures. "We urge those already close to retirement not to give up on saving at such a crucial time. These days there are far more financial options available as you reach retirement age – everything from drawing an income while your pension stays invested to releasing equity from your home." Increased savings, decreased awareness Despite some improvement in equity markets over the past year, only one in 12 of Britain's non-retired over-50s have increased their pensions savings over this period. People's awareness of their likely future income has fallen since last year when 63% felt they had a grasp on how much they would have to live on in retirement. Now only four in 10 of those approaching retirement have a "fair" or "good" idea of how much income they will have when they retire. A further 14% say they will be totally reliant on the state to support them financially. The main factors behind this are the rising cost of food and utilities (cited by 74%), the lower interest rates available on their savings (66%), and the effects of the ongoing economic downturn. Despite their concerns about financial security in retirement, just one in five over-50s have consulted an independent financial adviser for retirement planning advice. The number of over-50s going it alone with their retirement planning has increased 7% since the first LV= survey in 2008, with nearly two-thirds admitting they have never sought advice about their retirement. Opinium Research questioned 1,557 British adults over the age of 50 for the survey. The UK's over-50s population is 21,573,000, according to the Office for National Statistics .