A third of people approaching retirement feel inflation poses the greatest risk to their pension pot, whilst long-term care was their second biggest concern, a survey from Sun Life of Canada found.
The survey of 1,000 people with £100,000 or more in their pension fund and approaching retirement reveals the average person expects inflation to chip £20,501 off their pension pot.
Sun Life research shows inflation of 3.2%, which was June's CPI rate, would shave a £100,000 fund down to £72,2513.
"Inflation is a clear risk that consumers recognise, yet they still tend to opt for products that do not offer any protection against this major risk, highlighting a gap in people's understanding of what is available to them at retirement," says Mark Stopard, head of marketing at Sun Life.
"Having flexibility in retirement is vital and clearly something that the mass affluent market needs.
"Those who are retiring or part retiring at age 60 and who have amassed funds of over £100,000 may not suit a conventional annuity, so it is key they have access to an adviser who can then help them choose the most appropriate solution for them, which may offer protection from inflation."
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