Research from pensions and retirement specialist LV= highlights how millions of people don’t understand their retirement options when they stop work.
The LV= Wealth and Wellbeing Monitor* - a quarterly survey of 4,000+ UK adults – reveals:
Most people know little about available retirement products
There are a lot of different retirement products available (e.g. Drawdown, Life time Annuity, Fixed term Annuity, etc).
How much do you think you know about your product options at retirement and the pros and cons of each option?
And they don’t understand some of the big risks in retirement.
How much do you understand about the following…
Although people don’t understand their options, many are not considering taking financial advice.
Attitudes to financial advice:
There are a few different reasons why some mass affluent refuse to take financial advice:
“People planning for retirement should think hard about what they want to do when they eventually stop work. It is helpful to have a good idea of the lifestyle you want, how much it will cost and how you are going to pay for it. The more enthusiastic you are about retiring, the more likely you are to develop a robust retirement plan. Consulting a financial adviser is a good way to ensure you achieve the retirement you want.
“People have a series of big decisions to make as they approach the end of their working life and each one can make a huge difference to their retirement. For example, should they drawdown their pension in one go or over a period of time? Should they take their 25% tax free cash or leave the money in their pension fund to grow? Should they buy an annuity to guarantee an income for the rest of their lives or go for drawdown? These are questions a good financial adviser will help answer.
“Taking financial advice is an excellent idea because it compensates for the emotional biases people have when they make big financial decisions. A DIY approach to managing large pension funds at retirement is fraught with risk. People can easily buy the wrong products, incur unnecessary tax bills or simply exhaust their retirement funds too quickly but an adviser will provide an impartial, cool-headed approach to their client’s finances and offer solutions that the client will not even have considered.
“Planning for retirement is complex. Doing your research and taking financial advice is good way to guide consumers through their options and ensure they get the retirement they want.”
People approaching retirement can visit PensionWise, consult the LV= Retirement Advice Service or speak to an independent financial adviser.