THE STATE OF THE NATIONS ‘PENSIONERS’ !
New research has recently outlined that a small number of pensioners are turning to loved ones to help them financially during their retirement, with those who are approaching retirement seeming to be in an even worse situation.What I find more worrying is that they are also more likely to take financial advice about retirement from friends rather than professionals!
The Annual ‘State of Retirement’ report shows that 10% of pensioners rely in some degree on friends and family and that over the next ten years this is expected to rise to 27% of pensioners!
GETTING MORE FROM YOUR MONEY
There is a worrying trend of people turning to their family and friends for advice about their finances rather than professionals. 60% of existing pensioners took financial advice from non-professional sources and 72% of those approaching retirement plan to do the same. Only 25% of over-50s have taken, or plan to take, professional advice about their retirement, despite the fact that this could help them get more from their money.
Pension reforms in the last few years have increased choice and flexibility and made it even more important that people are able to access financial and pension advice. Many people approaching retirement say that the changes are too difficult to understand without professional help.
FINANCIAL ADVICE WORTH THE MONEY?
Those who do take financial advice certainly see the value, as in the last two years the number either approaching or at retirement who felt financial advice was ‘worth the money’ has nearly doubled.
Recent research outlines nine common ‘states’ or typical financial situations – retirees fall into, including the one in ten who are ‘Reliant on Others’. The remaining eight states are:
Property Pensioners – 22% of over 65’s – These retirees rely on some value from their property to help fund their retirement, either through downsizing, relocating or equity release.
Grey collar workers – 8% of over 65‘s and increasing -This segment describes those who choose to carry on working after the state pension age 65, either by choice or necessity. The good news is that for most, this is a choice, with the majority (87%) of those working at retirement age doing so because they want to.
Overwhelmed, 19% of over 65‘s -This group relates to those who are confused by the number of options available to them, undoubtedly influenced by the range of choices opened up by the recent pension freedoms.
Second homeowners – 7% of over 65‘s – these people have second properties either as an investment or means of income, allowing them to be able to live comfortably in retirement.
Falling short – 24% of over 65‘s – These retirees worry that their savings and/or pension won’t last their full retirement or allow them to have a comfortable lifestyle in their later years.
Pension investors – 9% of over65‘s – Having left work, this segment uses some of their new free time to make active decisions about their pension resources and reinvest to continue to grow their reserves.
State pensioners – 43% of over 65‘s – This is the most common of the states of retirement, where the state pension provides the majority of retirement income, often supplemented by personal pensions. This segment is also the most likely to worry about having enough money in their retirement years or look to other sources for income, such as part-time work.
Defined and refined – 24% of over 65‘s – These people are retired on a healthy defined benefit pension, which provides a fixed income for life, allowing them to have a high standard of living in retirement.
PROFESSIONAL RETIREMENT PLANNING ADVICE
Given the increasing complexities we now have to face regarding pensions, and with the economic impact of leaving the European Union still unknown, there’s never been a more important time to obtain professional advice about retirement planning. If you have any concerns or questions about your retirement plans, please contact me.
Claire Blake IFA
07767 308783
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