Lack of savings is the biggest challenge faced by advisers whose clients want a sustainable income in retirement.
This is according to the latest FTAdviser Talking Point poll, where 77 per cent of advisers cited not enough savings being an issue with retirement income, followed by 13 per cent who thought state pension age changes were a barrier when it came to helping clients achieve an income throughout their later life.
Jaskarn Pawar, chartered financial planner at Investor Profile, said he was not surprised by the outcome of the poll.
Mr Pawar said: “The post-war mentality of financial prudence has well and truly gone.
“It is the good times now and people want to spend today without too much thought for tomorrow. The issue is that people don’t sit down and work out what their finances might look like over the long term.”
He added that auto-enrolment was “pretty much useless” if clients did not have a financial plan in place for their retirement, even with the higher contributions coming in.
“Contributing any amount to a pension is futile unless you know how much you need to be investing. What is the point in investing £50 per month if you should be investing £500 per month?” Mr Pawar pointed out.
Royal London’s Lorna Blyth previously told FTAdviser that those customers in drawdown may not continue to enjoy the strong market returns they have since the pension freedoms were introduced in 2015.
Only 10 per cent of advisers who voted in the poll said possible lower returns from stock markets were a potential challenge for clients wanting to achieve a sustainable retirement income.
Scott Charlish, a financial planner at Brewin Dolphin, said retirees can maximise their retirement savings by using some planning techniques.
“Firstly, consider how long the funds need to last and although annuities are out of favour compared to other options, they may still be useful for those who sadly face ill health in retirement,” he explained.
“Also, look at the savings held and determine if any capital gains exist which can be managed over a period of time rather than forcing a single sale, which triggers a tax that otherwise might be avoided.”
Rachel Vahey, product technical manager at Nucleus, added: “Of course, the best option for someone to enjoy a sustainable income in retirement is to save as much as possible as early as possible, and then invest wisely.”
The pensions gender gap has widened in recent years, yet none of the advisers who took part in the poll said this was an issue when it came to ensuring their clients achieved a sustainable income in later life.
According to data from Royal London, in 2016 to 2017 the gap between men and women in terms of gross income was £85 per week, up from £31 a week 10 years earlier.