1 in 3 Brits plan to use the markets in retirement

New research from MGM Advantage suggests that UK adults are planning to use equity investments to help them outstrip inflation and manage the rising cost of living.

Over half (53%) of UK adults rate the rising cost of living as their number one fear for retirement, and almost a third (32%) of pre-retirees say they would retain some exposure to stocks and shares to offset the negative effects of inflation on their retirement income.

The figures show that the rising cost of living is UK adults’ number one fear for retirement, above keeping fit & healthy (45%) or even losing a spouse or partner (32%). When asked about how they planned to offset the declining purchasing power of their pension pots and the negative impact of inflation, almost a third (32%) of non-retired respondents aged 55+ said they would retain some exposure to stocks and shares.

Andrew Tully, Pensions Technical Director at MGM Advantage said: ‘Everyone’s feeling the pinch and the cost of living crisis continues to affect household budgets. It’s not surprising that people are thinking about how to ensure they have more money to live on in retirement and are considering retaining some exposure to equities.

‘To maintain equity exposure in retirement while generating an income usually means using income drawdown. But, the risks associated with drawdown mean it is not for everyone, so we should exercise caution shoehorning everyone into that type of plan. For drawdown to provide sustainable income through retirement requires a high degree of exposure to equities, and therefore more risk.

‘Clients want protection against the risks associated with outliving their savings while managing the effects of inflation. This is where products like investment-linked annuities can help, allowing people to remain invested in equities so that there is potential to deliver more income over retirement than drawdown, while reducing the risk of depleting funds.’