When we think of retirement, we picture walking away from working life to enjoy the best these years have to offer. This can include travelling the world, spending more time with family or even just enjoying a gentler pace of life. The golden years are full of opportunity and you’ve earned your right to make the most of them.
But a fruitful retirement requires careful planning. Investment manager Abrdn’s ‘Class of 2022 UK Retirement Report’ surveyed 2000 UK adults who are either planning to retire in the next 12 months or who had retired in the previous 12 months. The report highlights some worrying trends and paints a concerning picture around the lack of robust planning in this area.
The survey showed that just 16% of respondents had mapped out how they’ll make their money last and only 20% had made a will. Only 15% had looked at how their savings could outpace inflation and the same amount had consolidated their pensions. Worryingly, 5% had done nothing to prepare for retirement.
The report also delves into where people are most frequently seeking advice on retirement. It showed that 39% of people discuss retirement with their partners, 28% with their children, 23% with friends and 19% with an employer. Just 18% had discussed retirement plans with a professional adviser.
The outlook is also stark when we focus in on high-net-worth (HNW) individuals. A 2022 survey by Natixis Investment Managers probed retirement sentiment amongst millionaires globally. The survey showed that 42% were so worried about retirement they avoid thinking about it altogether and that 36% worry it may not even be an option. There were 58% of respondents that said they have accepted they will have to work longer than planned and 35% that think it will take a miracle to retire securely. Concerns about financial security in retirement are by no means limited to those outside the HNW bracket.
Seeking professional advice
A professional financial planner is a valuable resource for those looking to make the most of their retirement. Seeking a neutral and informed opinion will ensure that you receive an umbrella view of your finances and make the right decisions when planning for your future prosperity.
Modern technology can help to demystify what it will cost to fund a comfortable retirement. Using cashflow modelling software, financial planners can demonstrate how a client’s finances will fare in various scenarios throughout their lifetime. For example, forecasting your monthly living allowance for the next 30 years and how holidays, home improvements and care costs figure in the equation. All this information can then be illustrated through simple graphs.
It is important to be armed with as much knowledge as possible when planning retirement. Think about it like preparing for a holiday abroad. You can research the costs of various attractions and restaurants before you depart so you don’t overspend in the first few days. This will allow you to enjoy your break without worrying about running low on funds in the latter stages. Through extending this mindset to retirement planning, you can ensure you are comfortable as you get older.
Moving forward with confidence
Consulting a financial adviser will not only help you organise your wealth more effectively, but could also have positive effects on your wellbeing. According to a 2020/21 survey by insurance company, LV, wealth planning can boost retirement confidence with 65% of those that had consulted an adviser expressing confidence they’d have enough saved for retirement. Securing peace of mind on the state of your finances ensures you have one less thing to worry about in your twilight years.
Retirement can mean a significant change for people as they walk away from their careers. Adjusting to this transition can take time especially when it comes to receiving a reduced level of income. Preparation is always key and you should try to do as much as you can to ready yourself for when retirement arrives. Aside from cashflow modelling, it is important to set the expectations of people around you regarding your future financial situation. Your ability to financially support people may change and voicing these potential changes early is sensible. Also ensuring you are on top of areas such as pension provisions, property and taxation before you hit retirement will minimise the chances of unexpected challenges later.
If you’re nearing retirement and want to be fully prepared for the future, get in touch with the London & Capital team to learn more about what your post-work years could look like. By taking just a bit of time and scheduling a couple of meetings with an adviser, you can start looking forward to your retirement with confidence.