- Recent Pension and Lifetime Savings Association (PLSA) Retirement Living Standards update reveals a significant increase in the cost of maintaining a moderate retirement, which has surged over the past year1.
- This aligns with 71% of financial advisers surveyed, who report their clients’ primary concern is the fear of outliving their savings.
While recent high inflation, the cost-of-living crisis and economic volatility have put real pressure on many people’s finances, research from NextWealth’s Managing Lifetime Wealth2 report, sponsored by Aegon, reveals a deeper concern among retirement clients: the fear of outliving their savings.
The research, conducted among 200 financial advisers, pinpoints financial security as the primary focus for retirees, overshadowing aspirations for leisure and lifestyle changes.
Financial fears top the list of concerns
- 71% of advisers reported the number one retirement worry amongst clients is outliving their money.
- Inflation/cost-of-living follows closely at 64%, and 49% of advisers cited covering long-term care costs as another client concern.
These concerns are further underscored by the recent PLSA Retirement Living Standards1, which reported a substantial increase in the amount needed for a moderate retirement over the past year.
Fear the worst, plan for the best
While concerns about long-term financial security linger, advisers report that clients’ desires for retirement remain grounded. The findings uncover that clients aspire to maintain the familiar comfort and financial freedom they earned during their working years:
- 76% of advisers reported clients hope to maintain the same standard of living in retirement as before retirement.
- 65% of advisers found clients expressed a desire to assist the next generation (children/grandchildren) with financial commitments.
- 45% of advisers found clients wished to travel or live overseas
Steven Cameron, Pensions Director at Aegon, said:
“While the prospect of living longer brings many benefits, this research shows there are many challenges that come with navigating and making the most of your retirement years.
“71% of advisers say that clients are concerned about running out of money before they die, which raises real issues about the adequacy of current savings behaviours, as well as highlighting the value of advice at and through retirement, including if drawing a flexible income.
“Worries about high inflation and the cost-of-living crisis also feature high on the list, with advisers finding that 64% of retirement clients raise concerns due to the current economic climate.
“It’s not surprising that worries over the cost of long-term care features as a top three concern for retirement clients. These findings highlight how important it is for Government to provide more certainty over social care funding, so advisers can help their clients to plan ahead.
“While concerns linger, the report also paints a picture of aspirations for retirement. 76% of advisers said that their clients hope to maintain the same standard of living in retirement as before retirement. 65% of advisers noted that clients wish to assist their next generations with financial commitments, while 45% said that clients plan to travel and/or live overseas.
“These findings reinforce the research we’ve conducted on how living longer has impacted the retirement landscape. Those approaching or in their ‘Second 50’3 are bearing more of their own financial risks. This means that personalised financial planning based on an understanding of clients’ hopes and fears is crucial for tailoring strategies that meet individual needs and provide peace of mind.”
- Retirement Living Standards, launched by PLSA in February 2024.
- NextWealth research for the 2024 Managing Lifetime Wealth: Retirement planning in the UK report. The latest research was conducted in November 2023 with 200 financial advisers. Further details are available upon request.
- The Second 50: Navigating a multi-stage life, launched by Aegon in September 2023.
About Aegon UK
In the UK, Aegon offers pension and investment solutions to over 4 million customers. Aegon employs over 2,000 people in the UK and together with around 600 people employed by Atos, we serve the needs of our customers. Figures correct as at 31/12/2022. More information on aegon.co.uk
Aegon UK is part of the wider Aegon Group, based in the Netherlands, whose roots go back to the first half of the nineteenth century. Aegon is an international financial services holding company. Aegon’s ambition is to build leading businesses that offer their customers investment, protection and retirement solutions. Its portfolio of businesses include fully owned subsidiaries in the US, UK and a global asset manager. In addition, Aegon has partnerships in Spain & Portugal, Brazil and China, which create value by combining strong local partners with Aegon’s international expertise. In the Netherlands, Aegon generates value via a strategic shareholding in a market leading insurance and pensions company.
Aegon’s purpose of helping people live their best lives runs through all its activities. As a leading global investor and employer, Aegon seeks to have a positive impact by addressing critical environmental and societal issues, with a focus on climate change and inclusion & diversity. Aegon is headquartered in The Hague, the Netherlands, and listed on Euronext Amsterdam and the New York Stock Exchange. More information can be found at aegon.com
The information in this email is intended solely for journalists and shouldn’t be relied upon by any other persons to make financial decisions.