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Retirement planning more complex as clients underestimate long-term needs

9 September 2019

Clients are underestimating how much money they need to set aside for retirement, creating greater complexity for advisers, new research by Scottish Widows has shown.

Four in five financial advisers said clients are unprepared for how much they need to save, while over half (56%) of advisers said clients also underestimate how long they’ll live for. As such, more than a third (34%) of advisers said that helping clients plan ahead for their financial future is becoming increasingly complex.

While the average life expectancy in the UK is now 87 years, the average adult expects to retire at 65 and live to just 82. When advised to increase their life savings, nearly half (46%) of clients listen and reconsider their financial planning, according to advisers, but one in five (22%) think they know better, while 23% anticipate dying earlier than the national average.

Advisers are also facing the challenge of helping clients who fear they have not saved enough. As many as three quarters of advisers have clients who are concerned their pension savings are running out and 9% of advisers regularly see retired clients who worry their savings are running low.

For those retired clients concerned about not having enough money, one in ten (11%) admitted their savings provided a lower income than anticipated.

Emma Watkins, director of annuities at Scottish Widows, said: “Life expectancy has grown substantially in the last 60 years and now one in 10 people will live to be 100. We know this is creating new challenges for advisers, as they are having to help clients who could be vastly misjudging the costs of a longer retirement.

“We believe it’s important for people approaching retirement to have access to a range of options on how to access their retirement savings, and that’s why we’ve remained committed to the annuities market while others have withdrawn over the last few years. It’s also why we’re giving advisers the option of comparing our product with other providers, as it gives their clients more choice.”