With people on average living longer, life after 50 is more likely to be ‘multi-staged’ than follow the historic convention of education, work and retirement, according to Aegon’s new report.
The research, titled ‘The Second 50: Navigating a multi-stage life’, revealed those entering their 'Second 50' today have vastly different prospects from those of previous generations, meaning retirement advice continues to be a more vital and valuable part of financial planning.
One in four children born in the UK today can expect to live to almost 100.
This brings with it more possibilities than ever before – 53 per cent hoping to spend more time with loved ones, 45 per cent planning to travel, while 33 per cent expecting to pursue new hobbies.
While working into later life is often seen as a negative, the idea of a sudden ‘hard stop’ retirement is no longer the norm with only 27 per cent of people currently in employment expecting to do this, which opens up the possibilities of a longer, and possibly more varied, working life.
The main reasons for doing so are positive and include an enjoyment of working life (57 per cent) and keeping the mind sharp (54 per cent).
Only 29 per cent said it was because they had not saved enough
Steven Cameron, pensions director at Aegon, said: “As we see record numbers of people in the UK celebrating their 100th birthday, we want to start a conversation about how varied people’s second 50 years may be and to help people better understand and navigate them.
“For many, seeking financial advice will be of particular value.”
Cameron said the Second 50 is a new phase of life that is vastly different to the prospects our parents and grandparents had when they reached age 50.
“There are millions of combinations of circumstances and situations that people over 50 may find themselves living through at various times and in different orders, meaning everyone’s Second 50 is truly unique,” he said.
“In fact, in many ways, it’s uncharted territory. We can no longer simply look to what’s gone before to know how to manage it on behalf of clients. Our report picks out five fundamentals to consider as you help your clients navigate this journey.”
The increased demand for retirement advice
Those aged 50-59 expect to spend almost a fifth (17 per cent) of our time in retirement in ill health. But despite this, just 25 per cent have factored future social care expenses into retirement savings needs.
The report uses unique Aegon research alongside the latest available UK national statistics to help identify the ways in which life after 50 will differ.
It proposes areas to consider when planning ahead and seeks out the key drivers for change within what Aegon is calling the ‘Second 50’.
Aegon and NextWealth data released earlier this year showed increased demand for retirement advice, which accounts for 58 per cent of the assets firms advise on.
The growing variability in our Second 50 years and the millions of combinations have key implications for the advice community:
- Clients will need personalised help to plan for multiple stages of retirement, as well as unexpected life events such as social care in later life.
- Financial planning may require a more holistic approach, reflecting the interconnections with future transition from work, health, family and wellbeing.
The report’s findings include considerations for people to make the most of a longer, and more varied working life. It sets out five fundamentals of life after 50 that are changing significantly:
- Work – including how the transition from work into retirement
- Wealth – the money built up from savings, investments, and pensions as well as if they own their own home
- Family – caring for or financially supporting other generations
- Health – likely to see changes in health in later years
- Wellbeing – what brings joy and purpose in the Second 50
Aegon believes the UK government and employers have vital roles to play in supporting a longer, more varied working life for the UK population.
Cameron added: “We want to explore the Second 50 not just with individuals, but with employers, the financial services industry and government, to create a landscape that is truly fit for purpose for everyone’s life after 50.
"Advisers will bring huge value in navigating that landscape.
“Whether it’s employment and pension law or the state pension, the government has the responsibility to support and the power to shape people’s Second 50.”
He said Aegon would like to see the government offer more flexibility around when people can access their state pension.
“In addition, employers play a vital part in life after 50 by offering flexible working, training, and support at all ages, and by harnessing the skills and expertise of those who wish to continue working for longer.” he added.
“Meanwhile, workplace pensions can help build the financial support needed by employees in later life.”
sonia.rach@ft.com
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