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Consumers 'Switch Off' When It Comes To Financial Planning

Oct 9, 2007
Britons could be set to face unexpected financial difficulties in later life, new figures show.

The news comes as research released by Norwich Union indicates that just under half (47 per cent) of all adults believe that they will need an annual income of more than 25,000 pounds in order to fund a comfortable lifestyle after they give up working. However, with this figure said to be 14 times the typical amount of annuity that is actually taken out, consumers may well find themselves struggling to manage their finances, which could incorporate paying utility bills and servicing secured loan payments, as they are older.

According to the financial services firm, the typical value of a pension used to purchase an annuity was reported to stand at 26,364 pounds last year. However, this in turn provides an actual retirement income of just 1,843 pounds per year, or 154 pounds a month, which could well see many consumers face financial hardship. In addition, the research also revealed a lack of understanding among Britons when it comes to financial products. Although a pension is used to buy a retirement income, usually in the form of an annuity, a fifth of those with personal pensions who were questioned are unaware what an annuity actually is. Meanwhile, six out of ten respondents were at least 40 by the time they had discovered that they had to purchase such a product to fund their retirement.

Commenting on the news, Scott Brown, head of annuities marketing for Norwich Union, said: "Mention pensions or annuities and most people just seem to switch off. But when you ask them what income they will need in retirement, people have some very high aspirations. Almost half the people surveyed believe that they will need 25,000 pounds or more a year to fund their retirement, fourteen times more than the actual average annuity income".

"With retirement income, the difference between 'what people want' and 'what people will get' is very different and it's essential that individuals face up to their needs in retirement."

Mr Brown added that because of "current trends" such as increasing life expectancy, it is crucial that Britons take the time to begin planning for their financial future "as we are reaching a point where some people will spend almost as long in retirement as they will in work".

As a result, those concerned about facing financial difficulties in later life may wish to take out a debt consolidation loan as a means of consolidating money owed to various creditors and free up more cash to save for later life. Earlier this year, Sue Anderson, head of member and external relations for the Council of Mortgage Lenders, reported that an increasing number of homeowners are looking to remortgage either to consolidate their debts or trade expensive unsecured debt for a more competitively-priced secured loan. She added that such debt consolidation attempts may well be "a logical thing" to do as many Britons could be set to be required to manage their finances on a much tighter budget in coming months.
About the Author
Mark Dawson writes for the the Loan Arrangers where you can compare loans and apply online for cheap secured loans. Visit Today: http://news.loan-arrangers.co.uk
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