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Seeking advice boosts retirement savings

Financial advice inceases retirement savings by nearly £100 per month and advised savers end up with an additional £3,654 every year of their retirement, according to research from U nbiased.co.uk and AXA Life Invest.

The research found that 43 per cent of UK savers approaching retirement increase their retirement savings levels by £98 per month as a result of taking financial advice, boosting their savings levels from £89 per month before advice to £187 per month following advice.

This additional £98 of monthly income adds up to an extra £3,654 every year of retirement, based on a retirement pot of £100,000.

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With investment growth of 5 per cent - the current intermediary rate for tax-advantaged products as prescribed by the FCA - a UK saver’s pension pot would be £63,595 larger than it would have been had they not sought advice.

Karen Barrett, chief executive of Unbiased.co.uk, said, “Retirement planning has always been the uppermost reason why people seek financial advice and this comes as no surprise given that the financial decisions you make for and at retirement are some of the most important you make in your life.

“The pensions world has seen a lot of change in the last few months, which has created even more options for consumers to consider, so having a professional adviser take you through the different options will help you to feel confident about the choices you make.”

Of individuals in the UK over the age of 40 who did not receive financial advice, 45 per cent have no money saved for retirement, and 52 per cent said they do not feel prepared for retirement.

Of UK savers over age 18 who have not yet retired, 54 per cent of those who received advice said they felt well prepared for retirement, whereas 14 per cent of the unadvised felt prepared.

Those who seek retirement advice for 11 years or more prior to retirement save an average of £223 per month for retirement, compared with £155 for people who have received advice for less than two years.

Simon Smallcombe, managing director of AXA Life Invest, said, “We believe that people should seek advice at least 10 to 15 years before retirement so that advisers can significantly boost the level of retirement income UK savers receive.

“As with most things in life, planning and preparation delivers better results. The sooner you seek professional independent advice, the more likely you will be to be comfortable in retirement and enjoy it to its fullest.”

The consumer research, conducted by Opinium Research in July 2014, consisted of 1,486 pre-retirees, of which 444 had sought advice on their retirement planning and 997 had not sought advice. Of advised UK savers approaching retirement, the sample size consisted of 213 UK savers aged 40 and over who had sought some advice on their retirement planning, taken from an overall sample of 1,486 pre-retirees.

Steven Rowe, director at Lucent Financial Planning, said, “People should start planning for retirement as soon as possible. The sooner you start, the smaller the payments you have to make over a longer period of time. People tend to leave it as long as possible, but once they start talking about retirement planning and see the effect of tax relief and compound interest, the light bulb goes on.”