People are waking up to the reality of living longer and the effect it might have on their retirement according to AXA, which found that almost two-thirds (63%) of people think the government will not provide the majority of their retirement income.
As people start to consider how they will fund their retirement, there is an opportunity for financial advisers to demonstrate the benefit of thorough long-term financial planning.
AXA's Big Money Index has revealed that many people are becoming increasingly aware of the need to begin planning for retirement earlier and that the state pension will not be enough to fund their retirement years. With consumers facing an average pension shortfall of more than £4,600 per year and unable to rely on the state pension, 40% of people have turned their attention to other methods of supporting themselves during their retirement.
Nick Elphick, managing director, AXA Wealth Specialist Products, said:
"As retirement approaches the opportunity to boost retirement income, for example through a personal pension, reduces. As a result, many of today's consumers won't be able to rely on the state provision to sustain the lifestyle they would like. There is a real opportunity here for financial advisers to help their clients look at the wide range of assets they have available and how these could be used to support them in the future.
"Some investors could consider consolidating wealth from a variety of assets to ensure they are making the most of all available tax allowances, while others could begin pooling assets with an investment partner in a family SIPP to take advantage of the ever changing tax landscape."
AXA's Big Money Index found that 41% of young professionals and 36% of those aged 45-54 will be postponing their retirement with plans to work longer and relying on their salary to achieve the lifestyles they aspire to in their later years. The data highlights how those starting out on their financial journeys and those nearing retirement are the most aware of the difficulties they will encounter if they don't begin their long term planning now.
"With people living longer perhaps it is not surprising to see that many are planning on working longer as a means of funding the kind of retirement they have always dreamt of. However, those in their 40s and 50s need to put some serious thought into their own personal circumstances and the big decisions they will have to make unless they begin to plan for their long term future - a reality check that an adviser can really work through with them.
"For some people there may be too little time to increase their retirement savings, but for those generations that follow, young professionals currently in their 20s and 30s, these findings highlight the importance of starting to save early and implementing a thorough long-term financial plan in preparation for retirement."