There are two noteworthy gaps on retirement readiness. The first is the greater confidence of advised clients over non-advised investors, which again speaks to the value of advice. Advised clients are notably more confident than non-advised clients that they will be able to stop working at the age they want, that they will be able to achieve their retirement plans and they know how much money they need to retire.
The second noteworthy gap is between advisers and investors. Retirement readiness remains a concern for advisers, especially in the present economic environment, with 22% of advised clients reporting they have reduced or will have to sell some investments to maintain their standard of living. Less than a quarter (23%) of advisers are confident that the majority of their clients will have enough in their portfolio to meet their retirement expectations; 31% believe half their clients will have enough, while 46% believe only a minority of their clients will have enough.
This concern does not carry over to investors, however. 69% of advised investors and 61% of non-advised investors are confident that they will still be able to reach their retirement goals. This confidence gap has been a long-established one in our survey. However, the fact that the gap persists in the face of the current cost of living challenges suggests there may be a degree of complacency or wishful thinking on the part of investors when it comes to retirement.
Given each investor’s expectations are specific to them, one way of closing this gap may lie in a more detailed exploration of their post-retirement lifestyle: the food, house, clothing, transport and holiday expenditures that they expect to make. The PLSA’s Retirement Living Standards* shows these costs for a minimum, moderate and comfortable level of retirement. That exploration could help with the finely balanced client conversations advisers may need to have with certain clients about maintaining their pension contribution levels.
* Source: www.retirementlivingstandards.org.uk