Retirement should be a time for people to relax and enjoy themselves but new research from Prudential shows that the reality of retirement can be very different.

There are 11 million retirees in the UK, over a third of whom (3.75 million pensioners) are struggling to live the life they expected.

Most over-55s (75 per cent) say they still have ambitions that they have yet to achieve. But depressingly, 42 per cent of these people say they will never now be able to fulfil their ambitions, or have no idea when they will be able to.

• Over a third of all UK pensioners – that’s 3.75 million – say they can’t afford to do what they thought they’d be able to in retirement.
• Over 55s say that an extra £7,300 a year is the ‘magic sum’ to make the difference to their retirement (for a retirement of 25 years that’s over £180,000).
• Almost half of over-55s have been struck by unexpected costs in retirement – with the kids being the number one cause.

Over a third (36 per cent) of over-55s put this down to lack of cash and say they cannot afford the things that they thought they would be able to in retirement. Unexpected costs are part of the reason for this.

Magic sum

When asked how much they would need to make their retirement easier, the average amount over-55s said was an extra £7,300 a year. Over 25 years that’s over £180,000. More worryingly, 1 in 3 said they would need even more than that – an extra £10,000 or more a year.

Unexpected costs

Unexpected costs affect almost half of today’s pensioners. For those having to shell out money they didn’t expect to – the biggest culprits are:

• Children and grandchildren (more than 4 in 10 said this)
• Home improvements and maintenance (over 3 in 10 said this)
• Medical bills (2 in 10 said this)

Ali Crossley, director for lifetime mortgages at Prudential UK, said: "When you put yourself in the shoes of a pensioner, it is really easy to see how unexpected costs can jeopardise retirement ambitions."

"It is really upsetting to see that nearly half of the over-55s questioned think that they will now never be able to live out their dreams because they don’t have the money. What many of these people don’t realise is that there is another source of income that they can turn to – their property. With the recent house price rises, there is £693 billion tied up in equity. This money could be released using a lifetime mortgage."

The Pru’s new lifetime mortgage has the flexibility to allow people to draw down some cash now, and more in the future. Interest is only charged on what customers have taken. This is different to most products, which do not allow flexible draw down.

A lifetime mortgage that allows flexible drawdown can be cheaper for the customer. Taking out a lifetime mortgage may also affect the borrowers tax position, eligibility for benefits and ability to move or sell their home, says the Pru.