Article by Christina
Do we all need pensioner financial advice
Lots of people are increasingly wondering whether they need pensioner financial advice. According to the latest survey by Wealth at Work it would seem that people are concerned. The survey found that:
- Almost 40% of people said that they may never be able to fully retire because of rising costs.
- A third had decided to delay their retirement for the same reason.
- 80% said that they thought they would have to work longer before they could afford to retire, and the same number said that they thought they wouldn’t be able to afford as comfortable retirement.
- Just over 50% said that they would talk to someone about pensioner financial advice, but that might be family and friends rather than a qualified adviser.
- 40% said they would like more support from their employer to understand their retirement options.
From these results it would seem that most people would benefit from pensioner financial advice. Along the same lines a survey by Phoenix Group found that:
- 44% of people hoped that they would be able to have a “hard stop” retirement where they finished work altogether.
- 47% however thought that they would have to retire gradually. Working less days over a period of time.
- 10% said they expected to or wanted to keep working rather than retiring.
There is also a big disparity between the average retiree and so called “super savers”. For those in Gen X (born between 1960 and 1979) some of whom are just about to retire the average in pension savings is £33,000. However, according to Pension Bee the top 10% of Gen X “super savers” have an average pension pot of £170,000 over five times higher than average. The “super savers” say that they made the extra savings by taking advantage of matched employer contributions, by contributing bonuses into their pensions and by reducing their outgoings to save more.
Without pensioner financial advice many pensioners might need to go back to work.
It seems that lots of retirees also intend to “unretire”. A quarter of adults according to research by Wesleyan say that they may consider starting to work again after they have retired. The main reason to go back to work is to pay for luxuries including holidays and home improvements in retirement. But also, to keep themselves active. Legal and General research on the same subject found that only 3% of people said they were thinking of going back to work after retiring. But a massive 2.8 million people have already returned to work after originally retiring.
It’s not surprising as the cost of retirement continues to rise. According to Hargreaves Lansdown a couple now need £36,500 a year in income in order to enjoy a moderate retirement. That’s a rise of 25% on last year’s figures. This includes the state pension of £11,500 and gives people an indication of where their retirement savings need to be. According to the research only 40% of households are likely to achieve this level of retirement income, which means that 60% will not be Able to enjoy a moderate retirement income. That’s 1.2 million people.
In another survey, Research in Finance found that just over 50% of people making investments could potentially be vulnerable. It’s important that financial advisers are able to identify vulnerabilities in order to offer the right levels of advice.
This is true when it comes to pension transfers. Especially where no pensioner financial advice is being given. Research from People’s Partnership estimates that up to £1.2 billion may be being paid in extra charges by people transferring their pensions from workplace schemes without knowing or checking what the charges are in their new scheme. Over 70% of those transferring their pensions admitted to not know what their new charges were and 10% thought that their new pension scheme had no charges. Value for Money is one of the areas that the new government’s pension review will look at. It needs to because the proposed Pension Dashboard will only make it easier for people to transfer without advice. Making it more likely that they might end up paying higher charges.
