Receiving financial advice is the strongest predictor of retirement income satisfaction and financial preparedness in later life, new research from Quilter finds.
According to the research, 92% of retiree households currently receiving financial advice are satisfied with their retirement income, compared with 74% across the retiree population as a whole and just 47% of those who have never sought advice.
Similarly, 88% of advised retired individuals report being satisfied with their retirement income, compared with only 43% of those who have never received financial advice.
The findings, based on a survey of 5,002 UK retirees, suggests that financial advice plays a crucial role in helping retirees respond to an increasingly complex retirement landscape characterised by ongoing pension, tax and inheritance planning reforms.
Retirees who receive financial advice are substantially more likely to engage with policy developments and adapt their financial plans where appropriate. Just 11% of advised retirees expect to take no action in response to future retirement policy changes, compared with 79% of retirees who have never received financial advice.
In addition, almost two thirds (63%) of advised retirees say the current political and policy environment is affecting their inheritance tax planning, compared with just 8% of those who have never sought advice.
Across the retiree population as a whole, 69% say they have changed their financial plans in response to government policies or policy proposals over the past year. Looking specifically at pension inheritance tax reforms, 29% plan to spend more of their pension savings during their lifetime, 26% intend to give away more pension wealth and 24% plan to access their pension savings earlier than originally intended.
The research suggests advised retirees may be better placed to assess these changes, supported by more diversified sources of retirement income and greater confidence in their long-term financial plans.
Kirsty Anderson, retirement specialist at Quilter, said: "Our research shows that receiving financial advice is the strongest predictor of financial confidence and satisfaction in retirement. While the level of personal wealth is naturally a factor, the gap between advised and non-advised retirees suggests advice itself plays a significant role in helping people achieve better retirement outcomes.
"Retirement planning has become considerably more complex in recent years. People are having to navigate changes to pensions, inheritance tax, savings policy and wider tax rules, often while balancing their own financial needs alongside supporting children and grandchildren. Our research shows advised retirees are much more engaged with these developments. They appear more willing to review existing plans, consider their options and take action where appropriate, rather than simply hoping changes will not affect them.
"Advice provides structure, context and a framework for decision-making. When policy changes occur, or even when proposals are rumoured, people with a financial plan are often better placed to understand whether action is needed and what it means for their long-term objectives.”
