The opportunities for advisers giving retirement advice in the UK are huge, and are set to keep growing, with the value of savings in defined contributions estimated to exceed £1 trillion by 2025.
There has been a significant amount of research into how retirement is changing. Much of this has looked at the way people are accessing their savings, but not why they’re changing their habits.
12 minute read
For many, retirement is a journey or a gradual transition, rather than a moment in time. As working patterns change, clients need and value the flexibility to choose how and when they access their pension savings and what they spend it on.
Helping clients manage their income and finances on their journey through retirement is both an on-going opportunity and a commitment for today’s advisers.
Although everybody’s different – with their own unique needs and priorities – in general, we’re living longer and fuller lives in retirement. For clients looking to phase in their retirement, popular options include: moving to part-time work before retiring; taking contract roles for a few months a year; or having an extended break before returning to part-time work.
A growing trend for people who’ve retired is to “unretire” and return to work; usually for social or financial reasons. The financial affairs of many of these are likely to be complicated, with a need for on-going advice.
“Unretirement was more common for participants who were male, more educated, in better health, owned a house with a mortgage (compared to owning it outright) and whose partner was in paid work.”
PLATTS, L., CORNA, L., WORTS, D., MCDONOUGH, P., PRICE, D., & GLASER, K. (2017). Returns to Work After Retirement: A Prospective Study of Unretirement in the United Kingdom. Ageing and Society.
Changing attitudes to later-life work and retirement mean that many clients need a high degree of flexibility in their retirement income. There are now several theories about the shape of income needs in retirement. These include:
Regardless of where your clients might fit on an income-needs graph or curve, it’s important that:
Propositions for your clients should be built to last and account for longevity risk, inflation, volatility, sequence risk and pound-cost ravaging. They should also be readily understandable and offer potential for investment growth. All of these factors will help you to satisfy your regulatory and client requirements, with a focus on transparency, simplicity, suitability, appetite for risk and good outcomes.