Only 39% of people agree they have a clear understanding of their retirement options which could risk people making poor choices
There are many retirement finance options(Image: WalesOnline/Rob Browne)
A retirement specialist has raised the alarm that more than half of those aged 55 and older are in the dark about their retirement choices. The head of retirement analysis at Hargreaves Lansdown, Helen Morrissey, pointed to fresh research indicating a mere 39% of people feel confident they understand their retirement finance options.
The study, conducted by Opinium for Hargreaves Lansdown in April 2025, surveyed 1,500 participants and revealed persistent confusion, with just 45% of over-55s grasping their retirement possibilities.
Despite the many options available for generating retirement income the prevalent lack of knowledge could lead to poor decisions, underscoring the need for better guidance, reports the Daily Record.
Ms Morrissey said: “We make some of our biggest financial decisions around retirement. Deciding when and how to retire, as well as how to draw an income, is hugely important and, in the event of annuity purchase, irrevocable.
“However the data shows there are worrying gaps in our knowledge that risk the wrong decisions being made.
“Only 39% of people said they had a clear understanding of their retirement options.
“The remainder either said they didn’t or just weren’t sure. For many these decisions are many years away and there’s time for them to do their research.
“However digging a bit deeper shows that even for over-55s there’s a knowledge gap that needs to be addressed.
“At this age many people may not have stopped work but they can access their pension and so the fact that only 45% of them said they clearly understood their options is concerning.
“At this stage many people will be giving retirement more serious thought. Some may have a clear retirement date in mind. Others may look to take a more phased run into it by winding down work over a number of years.
“These decisions will have big impacts on how income is taken so needs to be planned for.”
The retirement specialist highlighted the crucial questions you should be considering:
- Do you want a guaranteed income for life?
- Are you willing to continue to take investment risks with your pension?
Ms Morrissey added: “If you opt for an annuity you need to think about what type best suits you – do you need to make provision for a spouse? Do you need an inflation-linked product or level?
“Will you annuitise your entire pension in one go or are you looking to annuitise in slices as you age?
“Considering these options is vital as once bought an annuity cannot be unwound so if you make a mistake then you will be counting the cost for a long time to come.
“Similarly, with income drawdown, you need to understand that your pot remains invested in the markets and be comfortable with the risk of that.
“As none of us know how long we will live you need to be aware of the perils of taking out too much too quickly and the problems that may cause.
“You also need to think about what happens if markets dip and what it means for your budget if you have to cut back withdrawals.
“We advocate people in drawdown keep between one and three years of essential expenses in an easy-access cash account so they can use this money to supplement their income in volatile times.”
She further stated: “It’s important to make use of all the support that is available out there whether that be financial advice or guidance services such as government-backed Pension Wise.
“The Financial Conduct Authority’s work on the advice guidance boundary will also spell good news as it will enable providers to offer more support than they previously have been able to by letting them suggest more personalised options.
“Being able to offer such support could be a real gamechanger in helping people make more informed choices around retirement.”