'FREDs' frantic about credit crunch and fears of recession

Six months after the LV= ‘State of Retirement' report first identified the rise of ‘Fred' - people approaching retirement who are Facing Retirement Earnings Doubts - new research shows that seven out of ten (69%) pre-retired people are now more concerned than ever about their financial security. This equates to 7.1m people, an increase of 600,000 since the first LV= ‘State of Retirement' report was published in May 2008.

New concerns for pre-retirees

The rising cost of utility bills and food prices remains the biggest worry for people facing retirement, with 71% of those surveyed citing this concern. However this is marginally down on six months ago (76%), whereas the ‘Credit Crunch', stock market volatility, and fears of a recession have now emerged as growing fears, with an increasing amount of people worried about the impact of these issues on their retirement finances.

The ‘Credit Crunch' has become a concern in the last six months for an additional 2.1m pre-retired people, making a total of 4.2m, an increase of 27%. In addition, a further 1.8m people have become more anxious about a recession and a further 1.5m about stock market volatility, totalling 4.5m and 3.1m pre-retirees respectively. Over 50s are also more concerned about job insecurity than they were six months ago.

Not saving enough

Despite the increase in the number of people who admit to being more concerned than ever about their financial situation in retirement, one fifth (20%) are not saving anything towards their retirement, while half (51%) have not increased the amount they are saving. Of the one in ten (10%) who have increased the amount they are saving each month, the average is £225 a month according to the survey. This is £35 more than the average monthly amount revealed in the survey six months ago.

Mike Rogers, LV= Group Chief Executive, said: "In just six months the number of ‘Freds' has increased, indicating that pre-retired people across the UK are more concerned than ever about their retirement finances. Unsurprisingly, the Credit Crunch, stock market volatility, and fears of a recession are now huge issues for these people, along with the perennial concern about the rising cost of living.

"Despite admitting these concerns, few of these people are seeking professional independent financial advice, which is worrying. And it's not just those in later years who should be thinking about their income in retirement. It's never too early to start planning for this, especially in the current economic climate.

Not seeking advice

The latest report also shows that the number of people approaching retirement who haven't taken any form of financial advice about retirement planning has increased to six out of ten (60%), compared with 56% previously. Of those who have taken financial advice, one fifth (19%) have used an independent financial adviser, while one in ten (11%) prefer to chat things over with friends or family.

Of those who have taken advice, one in three (31%) pre-retirees has sought advice about ISAs, a quarter (26%) about pensions drawdown, and one fifth (22%) about low-risk investments.

Mike Rogers continues: "The Freds of this world have at least received some small comfort from the recent Pre-Budget Report, with the announcement of increases in both the state pension and pension credit. This goes some way towards bridging the gap between income expectation and reality in retirement, that our survey revealed is an issue for many people.

"Many people approaching retirement could ease their financial worries by releasing equity from their home, to help them to meet their own future lifestyle choices. Our survey shows that just one in ten (10%) pre-retirees have sought financial advice about equity release, yet it could prove to be a real solution for many."