While high inflation, the cost-of-living crisis and economic volatility have put pressure on people’s finances, advisers said the main concern for clients is outliving their savings.
According to NextWealth’s Managing Lifetime Wealth report, sponsored by Aegon, almost three quarters (71 per cent) of advisers reported the number one retirement worry among clients was outliving their money.
The survey, which asked 200 advisers, found that inflation and cost-of-living followed closely at 64 per cent.
Meanwhile, nearly half (49 per cent) of advisers cited covering long-term care costs as another client concern.
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 per cent 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."
Concerns raised most often by retirement clients
Source: NextWealth: Managing Lifetime Wealth Report, January 2024
Cameron added: “It’s not surprising that worries over the cost of long-term care features as a top three concern for retirement clients. 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 concerns are further supported by the recent the Pensions and Lifetime Savings Association's latest Retirement Living Standards, which reported a substantial increase in the amount needed for a moderate retirement over the past year.
It found that the income needed for a person to have a moderate standard of living in retirement had risen by 38 per cent, or £8,000, in a year.
While concerns about long-term financial security linger, advisers reported that clients’ desires for retirement remained grounded.
The findings revealed that clients aspire to maintain the familiar comfort and financial freedom they earned during their working years.
Three quarters (76 per cent) of advisers reported clients hoped to maintain the same standard of living in retirement as before retirement while 65 per cent found clients expressed a desire to assist the next generation with financial commitments.
Just under half (45 per cent) of advisers found clients wished to travel or live overseas.
Aspirations raised most often by retirement clients
Source: NextWealth: Managing Lifetime Wealth Report, January 2024
Cameron said: "While concerns linger, the report also paints a picture of aspirations for retirement.
“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."
sonia.rach@ft.com
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