A third of advisers say clients are choosing to work longer and retire later than they had initially planned.
Research by Aegon found that many people are worried that they have not saved enough for retirement and are consequently adapting financial plans. This survey — of over 200 financial advisers — found that that vast majority (77 per cent) said running out of money in retirement was clients’ main fear.
The survey highlights the challenges people face as they approach retirement, particularly when it comes to converting pension savings into a sustainable income. More than six out of 10 (63 per cent) of advisers said that clients faced difficulties when planning how much income they may need in retirement, and this was their second biggest concern.
Advisres also reported that many clients were adapting their investment strategy, with 40 per cent of their retiring clients’ pension assets now invested in multi-asset strategies – the most popular investment strategy by a considerable margin.
Equity growth was the second-most popular strategy, with 15 per cent of retiring clients’ pension assets. This was followed by equity income and fixed income, both at 11 per cent of retiring clients’ pension assets.
In contrast only 10 per cent of retired clients’ pension assets are invested in annuities, despite more favourable rates and the stability annuities can offer in a challenging economic environment.
Aegon managing director, investment propositions, Lorna Blyth says: “Given the economic challenges of the past few years, more people taking the decision to earn for longer and retire later shouldn’t come as a huge surprise.”
But she pointed out that it as important savers and advisers recognise that stopping work at a later date, while living longer, doesn’t necessarily mean fewer years of retirement to fund and plan for. Aegon says it will be conducting more research on this in the second edition of its ‘Second 50’ report.
Blyth adds: “When it comes to building pension assets, the flexibility and risk-rated options afforded by multi-asset strategies could be incredibly valuable for a growing number of clients who are adopting new patterns of work and retirement. It’s understandable that advisers continue to make use of them in the best interests of their clients, despite annuities becoming more attractive during the recent economic challenges.”
