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Many misjudge retirement income

A study has revealed that two out of three over 40s are already planning on how they intend to spend their retirement years, Aviva has reported.

The same study found that £15,000 a year was needed to support an ideal lifestyle.

Once work has ended and retirement has begun, researchers found Britons tend to opt for three holidays each year (one of which is overseas), and that the retired like to take up new hobbies and activities.

Daily expenses and rising bills mean that around £1,200 per month is required to fund the preferred retirement lifestyle.

Managing Director of Retirement Solutions at Aviva Clive Bolton explained that many people looked forward to the end of work and having more time on their hands in retirement, and that most people have at least some idea of how they would like to spend their retirement.

Bolton warned that, whilst many people planned what activities they wanted to do in retirement, many underestimated the amount of money required.

He added that the state pension was unlikely to be sufficient to cover any retirement activities, emphasising the importance of having a financial plan to provide additional retirement income.

Despite the new pension reforms announced in the Budget permitting people to spend their pension pots as they wish, Bolton stressed that it was critical to have enough annual income to cover costs throughout retirement.

Depressingly, research has revealed around three in 10 over 40s have no plans whatsoever for funding their retirement, and 64% of those who do have a plan do not believe it will provide enough money to fund everything they wish to do in retirement.

Bolton said that a 30 year retirement was quite possible, making it important to receive a sufficient retirement income every year, not only for interesting activities but to afford everyday essentials.

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