Just 15% of reposondents hoping to retire in the next 12 months have put together a retirement plan, according to research by Fidelity Worldwide Investment.
Its Class of 2015 report, which surveyed 500 employees planning to retire between April 2015 and March 2016, found that only 15% of respondents have done extensive research in order to establish their options in retirement.
It also found that most people are preferring to wait before taking any action, with 27% of respondents waiting to see what format the new freedoms and choice reforms will take.
A further 10% of respondents are holding out until their product provider contacts them.
However, nearly two-thirds (65%) of respondents on the cusp of retirement feel confident about managing their finances, the report found that the basic elements have not yet been considered.
One in 10 believe they can organise their retirement income without the need to contact their pension provider to establish terms of access.
A further 7% of respondents had not thought about this element.
In addition, 13% of respondents do not intend to investigate any entitlement to extra cash, guaranteed annuities or penalties, with a further 10% not having considered this necessary.
Emergency funds or contingency plans for the death of a partner have also not been considered as part of respondents’ retirement plans by respondents. Some 8% did not consider the former was required, while 10% fsaid the same about the latter life-changing event.
But the majority of respondents have a realistic view to how much lead time they will need to plan for retirement. Just under a quarter (23%) stated three months was required, while nearly one-third (30%) said they would need at least six months.
Alan Higham, retirement director at Fidelity Worldwide Investment, said: “The date of 6 April is not something that should be viewed as a target, reached at all cost and at the sake of vital research and careful consideration.
“Indeed, people may prefer to take their time to work through their retirement plans, which is an approach we would strongly endorse.
“These decisions are complex and we would urge people to seek the appropriate expert help and advice in order to ensure they get their most from their retirement savings; be it through careful research or through an adviser or Pension Wise if they are less confident.
“However, it is alarming that there is a certain hardcore of people taking an approach to retirement that they would not take to their everyday life. With neither a rainy-day fund, nor idea of a budget nor, indeed, an intention of establishing the best deal or checking the small print on their funds, this group is vulnerable to making a poor choice that could cost them dearly in retirement.
“We would strongly urge those retiring next year and beyond to research the key issues we have set out here to ensure financial peace of mind in the longer term.”
With over 80% in default funds most are on an auto-pilot strategy based on an assumption they will buy an annuity at retirement. With forecasts of annuity purchase post-April ranging from 25 to 40%, that is a lot of people potentially heading in the wrong direction. One size fits all solutions no longer work. Ideally, people would make decisions approx 5 years out and tailor their investment strategy accordingly. Lots of work to be done in this area if we are to see big improvements in retirement outcomes.