Too many putting off retirement planning: survey
Consumers are putting off retirement planning to the last minute, leaving many advisers unable to help them prepare for their future, a survey from Axa Wealth has found.
The survey, which polled 200 IFAs across the UK, found that 31 per cent of clients are waiting until six months before their retirement date, or even later, before seeking professional advice.
Three quarters of IFAs who took part in the survey recommended that consumers should seek advice about their retirement at least seven years in advance. However, they said as many as 24 per cent of clients are waiting until six months before retirement to take advice, while many others aren’t taking advice until after they have retired.
Simon Smallcombe, head of guaranteed distribution for Axa in the UK, said IFAs should do more to engage with clients about retirement to get them to plan as early as possible.
He said: “Seeking professional retirement advice is absolutely critical and the sooner the better, especially in today’s market, so advisers should engage their clients on the subject of retirement planning and pensions as early as possible.
“Existing plans can be regularly reviewed to reflect changing circumstances, so it’s not a panic the year or so before the desired retirement date.”
With annuity rates at historically low levels, poor returns on savings account and market volatility battering investments, Mr Smallcombe said IFAs should be taking the opportunity to meet with clients early and explore the range of options available when it comes to securing a decent retirement income.
This could include drawdown and traditional annuities, or taking out an alternative products, such as an enhanced annuity, a flexible annuity or a fixed-term annuity.
Mr Smallcombe said: “There are so many more choices today, particularly with regards to flexibility and the potential for capital growth, but all these decisions need to be carefully planned.”
The news came as Aviva released data that showed that in the past 12 months household debt has increased by 58 per cent to £9314, while income has risen 4 per cent and savings pots are up 6 per cent.
Philippa Gee, managing director of Shropshire-based Philippa Gee Wealth Management, said: “I agree with the principle that someone looking to retire should be seeking advice well before then. People need to start thinking about retirement when they start work in their 20s. It might not be high up on the list, but they need a plan.
“There is also a much wider choice of retirement products now and I have found people are increasingly looking at enhanced annuities.”
Ms Gee added that she sends regulator communications to clients, through email, phone calls or the post, keeping them up to date on market trends and other developments - a “hand-holding” service she said they appreciate.
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