Paid post by Scottish Widows

The retirement wave?

By Iain McGowan, Head of Fund Proposition, Scottish Widows

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.





A growing opportunity

• Over £2 trillion is currently held in UK pension schemes.

 Source: Spence Johnson, Market Intelligence, 2016. UK Defined Contribution.

• DC assets will grow to £1,040bn by 2025 at 13% a year – more than tripling its current size of £303bn. 

Source: Spence Johnson, Market Intelligence, 2016. UK Defined Contribution.

• The value of UK housing stock reached over £6 trillion in 2017, according to Halifax. Almost 85% of that stock is owned by people aged over 45.

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.

Phasing in retirement

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.

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.

Income needs: several theories

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:

1. The retirement smile: This states that income needs will decrease as clients become less active. But increase again as they move to long-term care. This was probably the most widely-accepted theory until recently.


Source: Scottish Widows, 2018.

2. The downward curve: This is similar to the retirement smile, but without an upward spike, as not everyone will need long-term care. According to Age UK:

• Only 16% of people aged 85+ in the UK live in care homes*.

• The median period between admission to a care home and death is 462 days (or 15 months)*.