New research from Age UK Enterprises, the commercial services arm of the charity Age UK, has found that 61% of people over the age of 55 are confused by financial products.
Only 30% are confident that all of the financial purchases they have made are the best for their needs.
When asked about annuities, the financial instrument typically used to convert a pension fund into an income in retirement, nearly half of those in the 55-64 age group did not know what an annuity was.
Nearly a quarter of those asked wrongly thought that an annuity was an investment fund.
The findings of this research are quite worrying. It is people in this age range, who are approaching their retirement age, who need to make important financial decisions.
Part of this financial decision making process involves understanding the various financial product options available. Making good financial decisions definitely requires understanding the financial product you select.
Purchasing an annuity with your pension fund is often a decision that will last for the rest of your life.
As well as ensuring that you obtain the most competitive annuity rate, by exercising your right to an open market option where necessary, it is important to understand and assess the various annuity options, such as guarantee periods and escalation.
One way to ensure that you are not confused by financial products is to work with a professional independent financial adviser who will explain the various options and their recommended solutions.
Your financial adviser should always present their recommendations to you in writing, giving you the opportunity to carefully read what they are recommending before you sign any paperwork.
Do speak to us if you are confused by financial products and want to ensure you understand all of your options fully at retirement.
Photo credit: Flickr/Chloë Rae
