Later Life

Advisers say longevity planning is becoming increasingly complex

80% of advisers said their clients underestimate how much they need to save in retirement.

Rozi Jones
|
6th September 2019
maze confused adviser difficult
"Life expectancy has grown substantially in the last 60 years and now one in 10 people will live to be 100."

More than a third (34%) of financial advisers say that helping clients plan ahead for their financial future is becoming increasingly complex, research from Scottish Widows shows.

80% of advisers said their clients underestimate how much they need to save in retirement and 56% often see clients underestimating how long they’ll live for.

The average life expectancy in the UK is now 87 years, yet the average adult expects to retire at 65 and live to just 82. When advisers tell clients they’re underestimating their life expectancy – and should therefore increase their savings contributions – nearly half (46%) listen and reconsider their financial planning. One in five clients (22%) think they know better than their adviser about how long they will live for, while 23% think they will die earlier than the national average life expectancy.

As a result, advisers say they are regularly having conversations with their clients to discuss the potential for running out of assets and agree on plans to mitigate this.

Advisers are also helping clients who fear they will ‘just about retire’ on current savings levels. Three quarters (77%) have clients who are concerned that their pension savings are running out and one in 10 advisers (9%) regularly see retired clients who are concerned their pension savings are running low.

The largest source of anxiety for those who are retired and concerned about running out of money is that they didn’t build up enough savings during their working life (43%), or that living costs in retirement are higher than they expected (18%). One in 10 (11%) said 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.”

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