UK adults are missing out on ten valuable years of retirement planning, according to new research from unbiased.co.ukand MetLife.1 The average age at which people first seek retirement advice is 35 years old, yet advisers say that they can provide the most long-term value for people at the beginning of their working lives.
Even more worryingly, 38 per cent of people surveyed in the 2015 Value of Advice report are not making any savings at all for their retirement.
The average amount that adults are saving towards their retirement each month is £97, but those who took professional financial advice are saving an additional £71 per month. Over the course of a working life, this equates to an extra £25,730 in the retirement pot of someone who took advice at age 35, even before interest and tax relief. However, an individual taking advice at the recommended age of 25 would have an additional £34,300.2
People who have taken advice are also more realistic about the likely length of their retirement. They expect to have to fund a retirement lasting 37 years on average, whereas those who have not taken advice think they will be retired for just 22 years on average – a belief that may leave them dangerously under-funded.
Simon Massey, Wealth Management Director at MetLife, comments:
‘People need certainty about their income in retirement and the risk of running out of money and having to rely on the State Pension is one of the biggest fears for savers.
‘That is why it is important that providers offer as much flexibility as possible in line with the new pension freedoms while also helping people to understand the risks of outlasting your pension fund. Savers need to be as well-informed as possible which is why advice is important too.’
Karen Barrett, chief executive of unbiased.co.uk, comments:
‘At the age of 25, retirement is probably the last thing on your mind. But we in the UK could be massively better off if we all got used to the idea of planning for the end of our working life as soon as we begin it. Pension saving is cumulative by nature, so time is the single greatest asset on your side. If you start early, then even if you can save only small sums, compound interest over the years can make an astonishing difference.
‘There’s also real benefit in seeking professional advice at the start. It puts you in a position to build a long-term relationship with your adviser, so that together you can shape your finances to fit the life you want to lead. We found that clients and advisers work together for an average of nine years, with just over one in ten relationships lasting more than a decade.
‘As good as it is to plan early for retirement, it’s also never too late. Advisers are experienced in helping people at all stages of life, and the greater variety of retirement options now available mean that advice in later life is equally if not more important.’
For a free and confidential search for a whole-of-market financial adviser, visit www.unbiased.co.uk
ENDS
Notes to editors:
1unbiased.co.uk research conducted by Opinium Research between 27 February to 2 March 2015, among 2,002 nationally representative UK adults aged 18+.
2 Calculated by multiplying the extra average savings for people who have got advice (£71) by the number or years before reaching retirement, 30 years and 40 years, to get a cumulative total. Excluding interest and tax
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Helping over one million visitors a year, unbiased.co.uk is the UK's No 1 adviser search, connecting consumers with the biggest and most versatile search for regulated and independent advisers. We match consumers and businesses to over 24,000 IFAs, financial advisers, mortgage brokers, solicitors and accountants. We make it easy to find the right advice by providing information, insights and tools to facilitate consumer choice.
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Category: Value of Advice Tagged: pensions
