In today’s world, it seems some individuals may have to work for longer before being able to afford a comfortable retirement.
Indeed, the government recently confirmed that the State Pension Age would rise to 67 between 2026 and 2028. Plus, life expectancies for men and women rose to 79 and 82.9 respectively as of 2020, the Office for National Statistics (ONS) reports.
With these factors in mind, your clients may plan to stay in work for a number of years more than they’d hoped, in order to feel financially secure later in life.
Fortunately, new research has revealed that not everyone may need to do this. A study by Standard Life shows that those who take financial advice expect to retire three years earlier than those who do not. What’s more, they also said they’d be able to fund their retirement lifestyle for longer.
Let’s look at how working with a financial planner could give your clients a potential six-year boost to their later-life finances.
Advised consumers estimate they can fund their retirement for 6 years longer than unadvised individuals
With the ONS reporting inflation reached 10.1% in the year to March 2023, and the Bank of England (BoE) continually raising the base rate in an attempt to curb inflationary conditions, your clients could be finding it difficult to save for retirement at the moment.
Sadly, these factors (among others) mean the Department for Work and Pensions has reported that 12.5 million people may be under-saving for retirement.
Amazingly, the Standard Life research found that advised consumers say they’ll be able to fund their retirement lifestyle for six more years than those who haven’t seen a financial planner.
When asked for how long they thought they could fund their chosen retirement lifestyle without making any cutbacks, advised consumers gave an average answer of 23 years. This is compared with just 17 years for those that didn’t take advice.
You might be wondering: “how could financial planning make such a difference to funding my clients’ retirement lifestyles?”
In truth, the difference may simply come down to preparation. The study found 45% of those who took advice then wrote a detailed plan about spending in retirement, compared with only 18% of unadvised retirees who did the same.
So, especially with inflation eroding many people’s wealth, your clients could benefit massively from working with a professional as they approach retirement.
More preparation translates to a happier, less stressful retirement
According to the Standard Life study, not only may your clients be able to retire earlier and fund their lifestyle for longer, but they may also be happier in retirement if they work with an expert.
The research revealed that 96% of retirees who did “a great deal” of financial planning, and 86% who did “just a little” say that they are enjoying their retirement. This figure drops to 72% for those that didn’t work with a financial planner.
Conversely, those who didn’t take advice are also more likely to experience money concerns.
A report from Royal London found that 46% of unadvised people worry about being able to cope financially when they retire, compared with 37% of those who work with a financial planner.
If your clients seek not only financial comfort but greater peace of mind in retirement, forming a relationship with a financial planner could be an excellent next step.
3 impactful ways a financial planner could help your clients extend their retirement and live comfortably
Here are three impactful ways we can help your clients thrive in retirement.
- Assessing your clients’ lifestyle goals
When getting to know your clients’ financial needs, we often start by asking them about their most treasured dreams and goals.
Perhaps they wish to pay for their child’s dream wedding, help them onto the property ladder, or support them in starting their own family. They might wish to travel the world, volunteer, or buy a second home by the sea.
Whatever your clients’ ambitions for retirement, discussing them gives us a clear picture of the kind of financial plan they might need to get there.
- Using cashflow planning to model varying retirement scenarios
Cashflow planning is fast becoming a core element of modern financial planning – and there’s a very good reason for it.
This software lets us:
- Take your clients’ current circumstances into account
- Listen to their plans for the future
- Use this data to model different scenarios depending on the variables entered.
While there is no way of being 100% certain about the future, cashflow planning software gives your clients the opportunity to model their retirement lifestyle with hard data, then form a strong plan to help them achieve it.
- Giving advice on using tax allowances
Finally, working with a financial planner may enable your clients to mitigate high tax bills by learning about the tax exemptions and allowances available to them.
A financial expert can review your clients’ current tax situation, inform them of how they can reduce their bill if possible, and explain how their circumstances may change as they enter retirement.
Discussing these details well in advance of retirement could serve your clients well, as they may have plenty of time to make the necessary changes and gain more value from their wealth moving forward.
Ultimately, working with a planner can help your clients to determine the kind of lifestyle they want in retirement, ensure that they have enough savings to fund it, and make confident decisions about their money over the years.
Get in touch
If you have clients who are on the runway to retirement, putting them in touch with us could make the world of difference.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority do not regulate cashflow planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.