'Vast majority' of Brits fail to take advice or guidance before retiring

Around 14 per cent of retired and semi-retired people aged over 55 took regulated advice before retiring, with the “vast majority” instead taking a DIY approach or undertaking no planning at all, research from Just Group has found.

The survey, undertaken by Opinium, revealed that 10 per cent of retirees aged 55 or over had taken advise from their own adviser, whilst 4 per cent saw an adviser arranged by their employer, and 4 per cent used the free Pension Wise guidance Service.

In contrast, four in ten (40 per cent) of retirees took a DIY approach, conducting their own review of their personal finances to assess their income and outgoings in retirement, although this was more prominent amongst men, with 51 per cent taking a DIY approach, compared to 27 per cent of women.

In addition to this, nearly a third (30 per cent) of people stated that they didn’t do any financial assessments before retiring, increasing to 51 per cent amongst those who retired when they started to receive their pension.

Furthermore, around one in eight (13 per cent) said that they had no time to plan because they were forced to retire, although there was a gender split, as this increased to 17 per cent amongst women, compared 10 per cent amongst men.

Alongside gender differences, the research suggested that younger retirees were more likely to have planned their retirement than older age groups, as 18 per cent of retirees aged 55-64 saw a financial adviser and 51 per cent conducted their own financial review, compared to 12 per cent and 41 per cent, respectively, amongst 65-74 year olds.

More than double the number of people aged 65-74 also said they did not review their finances (31 per cent) compared to those aged 55-64 (15 per cent).

However, whilst a higher proportion of those aged 55-64 used Pension Wise, 9 per cent compared to 4 per cent amongst older retirees, Just Group noted that this was “still far below the government’s stated ambition to make it ‘the norm’”.

Commenting on the findings, Just Group group communications director, Stephen Lowe, said: “Stopping full-time work is a huge financial step and involves complex choices. Yet most people take a DIY approach and go it alone rather than engaging professional help.

“While not everybody will have access to an adviser or will want to pay for regulated advice, that doesn’t explain the very low number benefitting from the free guidance from Pension Wise which is available to all those aged 50+ with a defined contribution pension.

"State pension age still remains a key anchor point for giving up work. While early retirees are more likely to have made financial plans, those retiring at state pension age are more likely to say they didn’t plan, they just retired."

Lowe also highlighted the figures as demonstration of the scope for advice firms to broaden their offering to appeal to the army of ‘DIY’ retirees, as well as reinforcing the argument for automatically booking Pension Wise appointments for those aged 50.

“Our research shows that if a Pension Wise appointment was automatically booked, only 1-in-25 (4 per cent) of those aged 45+ with a defined contribution pension would opt out," he said.

“There is support from the industry, charities, Money and Pension Service and consumer groups for a pilot scheme to test the effectiveness of automatic booking which we believe offers the best measure strong enough to achieve the government’s objective of making Pension Wise use the ‘norm’ among people needing to make the best of their pension savings.”

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