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Waiting in vain? Why some retirees
might be sitting tight.
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Much has been written about the retirement landscape now that pension
freedoms are embedded, in particular the ‘choices’ that people are making
with their pension pots.
However, there seems to be a largely unreported group of people who have
gone somewhat under the radar, having reached retirement yet chosen to do
nothing with their pension funds, other than perhaps take their tax-free cash.
Now, this could be a conscious decision, initially using the
tax-free cash for a specific purchase or need, maybe to
repay some debts or just have some extra money in the
bank. It’s likely that this is underpinned by an intention
to continue working and therefore the full decision on
retirement benefits is intentionally deferred.
However, it’s a good bet that there are many retirees out
there who are making an unconscious decision not to
make a decision – probably for several reasons without
realising it:
• Being overwhelmed or confused by too much choice,
or hoping for a new whizzy retirement product to
be available.
• Being fearful of making a wrong decision; either
worrying about losing their capital in exchange for an
income, and/or remaining invested for flexibility but at
the risk of losing capital value if markets fall.
• Being reluctant to seek advice; perhaps not correlating
the value of recommendations and aiding decision
making, with the costs involved.
This conundrum of pension freedoms is perhaps reflective
of two underlying causes that are not necessarily obvious,
but can be addressed with help and careful planning:
Firstly, are retirees trying to make decisions based on
what retirement products are available to them, rather
than truly understanding what their financial requirements
will be, and how they will change, for the duration of
their retirement?
Secondly, it would appear that many retirees still don’t
fully understand how existing retirement products such
as annuities and drawdown work, and what all of the
respective risks and benefits are. Add to this the changes
that have occurred in death benefit options and taxation,
and it isn’t really surprising.
Even those ‘new’ retirement products such as hybrid
drawdowns with guaranteed elements, or annuities
with investment options are all based largely on an
amalgamation of existing product structures. So is it any
wonder that retirees need help?
There are now several routes to obtaining different levels
of financial advice. However, if cost is perceived to be the
barrier for some retirees, financial advisers can re-assure
their clients that it is money well spent if they choose to
obtain full advice. At the same time continue to provide
the necessary information so that clients can make
informed decisions.
Call 0345 302 2287 or visit www.justadviser.com
Think – Waiting in vain? Why some retirees might be sitting tight.
The role of advisers remains invaluable
in continuing to educate clients
Based on the fact that everyone’s retirement needs will be
specific to them, and that their solution should be tailored
to their circumstances, retirees need the benefit of an
adviser’s experience to be shown how they can also help
themselves.
This includes helping them to look at some of the more
fundamental aspects first, such as considering how long
they are likely to live for, and therefore how long they are
going to need to make their money last.
For more information contact:
Telephone: 0345 302 2287
Lines are open Monday to Friday, 8.30am to 5.30pm.
Alternatively you can email us:
[email protected]
Or visit our website for further information:
www.justadviser.com
Retirees need to understand that their retirement is likely
to be a series of financial decisions over a period of time,
rather than a ‘once and done’ scenario at retirement age. If
they can adopt this approach it may help with their decision
making process, so that if they still defer taking their
pension benefits it will be with a purpose in mind, rather
than for lack of knowing what to do.
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Helping retirees create their own retirement strategy will
enable them to better understand for themselves their
requirement for ratio of flexibility and access to capital,
measured against the need for guarantees and security, and
how this is likely to change over time.
Having an adaptable long term view of retirement, alongside
effective budgeting are pre-requisites for making informed
choices on appropriate retirement products. The support of
financial advisers in this regard is invaluable; if retirees have
a clear plan, perhaps they will be more open to not only
seeking out professional help and advice, but to also making
proactive choices rather than just waiting in vain.
Tony Clark
Product Marketing Manager
Just Retirement Limited. Registered Office: Vale House, Roebuck Close, Bancroft Road, Reigate,
Surrey RH2 7RU. Tel: 01737 233296. Registered in England Number 05017193. Calls may be
monitored and recorded, and call charges may apply. Please contact us if you would like this
document in an alternative format. Lines are open 8.30am to 5.30pm, Monday to Friday.
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05/2016