Research by NextWealth for Aegon UK has shown widespread changes in consumer behaviour regarding retirement.
Advisers were asked what changes they had seen in client behaviours over the past 12 months due to the challenging economic climate. The research surveyed advisers on how often they observed specific changes amongst the majority, some, very few or none of their clients seeking retirement advice.
Over half of advisers indicated that some or the majority of retirement clients had made the following changes:
• Stayed in work longer and / or deferred accessing retirement savings (68%).
• Withdrawing more from their overall savings (61%) – although only 4% said this was the majority of their clients.
• Reviewing the amount and / or timing of passing wealth to the next generation (59%).
• Wanted to decrease their level of investment risk (53%) – although 36% noted they had seen clients increasing their investment risk.
• Looking to guarantee some income through a combination of an annuity and drawdown (53%).
Steven Cameron, Pensions Director at Aegon UK, said: “The challenging economic conditions of late have impacted most people, including those approaching or in retirement. This research shows just how widespread behavioural changes are, which in turn shows just how valuable retirement advice is, especially in times of change.
“Over two-thirds of advisers have seen clients working longer and / or deferring accessing their retirement savings. A delay of even a year or two can make a big difference to sustainable retirement income levels as a result of saving for extra years, having a longer period of investment growth and having fewer years of retirement to fund.
“While three-in-five advisers (61%) have seen some clients take more from their overall savings to get by, it’s reassuring than only 4% have seen this behaviour from the majority of their clients.
“For many, passing on wealth to future generations is a key objective for retirement savings, but it’s not surprising that three-in-five advisers (59%) have seen clients reviewing when or how much to pass on.
“It’s also interesting to see that different clients respond in different ways. While 53% of advisers have seen some clients reduce investment risk, 36% have seen clients take the opposite course of action to increase investment risk, perhaps to seek higher returns.
“The recent high interest rate levels and the corresponding rise in annuity rates may also have led to more clients seeking to guarantee some income, including through combinations of annuity and drawdown.
“Overall, the research paints a picture of many clients changing their behaviour around retirement, but in a wide variety of ways. This shows the important role advisers play in tailoring their advice to individual needs and preferences, particularly amongst those approaching or in retirement. This further emphasises that for many people in or approaching retirement, their ‘Second 50’2 can be uncharted territory.”
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