Many Over-50s Haven’t Sought Financial Advice on their Pension
For many over-50s, the prospect of enjoying a long and fulfilling retirement doesn’t seem that far away.
So now is the time for them to make sure they have their finances in order, so they can be sure of a steady income in retirement that lets them have the lifestyle that they want.
However, a new study by the Social Market Foundation (SMF) has found that many aren’t doing so, with just 20 per cent of 50- to 64-year-olds having spoken to a regulated independent financial adviser about their pension.
This means that many people in this age group, some of whom will be hoping to retire in the next few years, don’t know how much they need to save for retirement or how to make the best use of their pension in later life.
More than two-thirds of 50- to 64-year-olds were found to be unaware of how much money they’d need for retirement, and less than one-third of those with a pension had a broadly accurate idea of how much they’d need to save to deliver their desired income.
On the other hand, figures showed that almost half of those who get independent financial advice are knowledgeable about roughly how much they’ll need to save in their pension.
Furthermore, the SMF research showed that 23 per cent of those who sought financial advice increased their pension contributions as a result.
These are clear measures of the positive impact that turning to a professional for guidance can have on a person, particularly when you consider the alternatives.
Indeed, the survey showed that a lack of pension knowledge was leading to many feeling anxious, while 40 per cent of those polled admitted they aren’t confident about being able to meet their desired income in retirement.
People approaching retirement age were found to be almost £250,000 short of the amount they’d need to achieve the income they want after they retire.
Figures also showed that the pension savings of the typical 50- to 64-year-old are 58 per cent short of what they need. This works out to a total savings gap of £132 billion a year for Britons who are approaching retirement age.
So why are people who aren’t far off retirement not getting the advice that could transform their later life?
Some 23 per cent of those polled said they felt financially knowledgeable enough to make decisions for themselves without getting advice, and interestingly, this view was more common among men (34 per cent) than women (22 per cent).
A lack of awareness about the support that’s out there could also be an issue. For instance, just 47 per cent of 55- to 64-year-olds said they’d heard of the Government’s Pension Wise service.
So regardless of when you would like to retire, there are clear benefits to getting regulated advice, such as having certainty for the future and being able to enjoy the lifestyle you would like in retirement.