The prospect of their clients running out of money in retirement has emerged as a clear front runner in terms of financial advisers’ concerns.
Research by Nextwealth, sponsored by Aegon, found that nearly three quarters (71%) of the 200 advisers interviewed pointed to this as a major worry.
The researchers defined this as clients ‘outliving their money’. The significant increase in the cost of maintaining a moderate retirement, along with a continuing rise in how long people are living are the underlying factors driving it.
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The second biggest concern cited by the advisers was inflation and the cost of living in general at 64%, and long-term care costs at 49% of advisers was third.
Aegon noted that the PLSA Retirement Living Standards reported a substantial increase in the amount needed for a moderate retirement over the past year.
In terms of client expectations for retirement, the researchers found 76% of advisers reported clients hope to maintain the same standard of living in retirement as before retirement, 65% said clients expressed a desire to assist their children or grandchildren financially, while 45% of advisers said their clients wished to travel or live overseas.
Steven Cameron, pensions director at Aegon, said: “While the prospect of living longer brings many benefits, this research shows there are many challenges that come with navigating and making the most of your retirement years.
“71% of advisers say that clients are concerned about running out of money before they die, which raises real issues about the adequacy of current savings behaviours, as well as highlighting the value of advice at and through retirement, including if drawing a flexible income.
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“Worries about high inflation and the cost-of-living crisis also feature high on the list, with advisers finding that 64% of retirement clients raise concerns due to the current economic climate.
“It’s not surprising that worries over the cost of long-term care features as a top three concern for retirement clients,” Cameron added. “These findings highlight how important it is for Government to provide more certainty over social care funding, so advisers can help their clients to plan ahead.
“These findings reinforce the research we’ve conducted on how living longer has impacted the retirement landscape. Those approaching or in their ‘Second 50’ are bearing more of their own financial risks. This means that personalised financial planning based on an understanding of clients’ hopes and fears is crucial for tailoring strategies that meet individual needs and provide peace of mind.”
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