PensionsOct 21 2019

How a mix of products can help in one's retirement planning

  • Describe how annuities can be helpful
  • Describe the importance of holistic financial planning
  • Describe how fixed term annuities work
  • Describe how annuities can be helpful
  • Describe the importance of holistic financial planning
  • Describe how fixed term annuities work
pfs-logo
cisi-logo
CPD
Approx.30min
pfs-logo
cisi-logo
CPD
Approx.30min
twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
pfs-logo
cisi-logo
CPD
Approx.30min
How a mix of products can help in one's retirement planning

Their employment also tended to be stable, with much of this generation working in the same job for life, and often rewarded with a defined benefit pension as a result.

Nowadays, people nearing retirement are likely to have had several jobs, not all of which will carry with them defined benefit schemes, and for some, a costly divorce may have impacted their financial wellbeing.

Even though divorce rates in 2017 hit their lowest level since 1973, the rate of splits among older people was higher than when overall divorces peaked in 1993. 

According to the Office for National Statistics, this is perhaps due to the fact that the nation has an increasingly ageing population and people are getting married later in life.

Add to this the rising likelihood that children are yet to have moved out - the average age of British first-time buyers has now hit 33 - the pressures on a retiree’s finances couldn’t be different.

This is why, rather than consigning options like annuities to the past, these products can prove to be useful components of a holistic financial plan, alongside the likes of drawdown products, Isa savings, and even property wealth.

Work hard, play hard

Retirement used to be a cliff-edge, with employees walking out on their last day never to return to the world of work.

But now it is far more common for people to reduce their working hours as they approach or reach state pension age and continue working in some form - part-time, remotely, or for themselves – into older age.

Given this trend, and the mixture of potential demands on retirement income, a holistic financial plan is needed to ensure that the money retirees worked hard to save is now pulling its weight for them.

Such a plan is likely to utilise a range of different retirement products that fulfil different functions.

For instance, fixed-term annuities, which guarantee a level of income for a set period of time, can be extremely helpful in filling a loss of earnings if an individual reduces their working hours as they near retirement age.

The benefit of such a product is that customers have more flexibility to revisit their income arrangements as their needs in retirement change.

It also pays a lump sum, known as the maturity value, at the end of the term. This money can be used to contribute to future retirement plans when employment income finally ceases – fixed term annuities do not pay an income for life.

Other factors are also affecting retirees’ financial needs in later life.

PAGE 2 OF 4