Life changes: turning retirement into something real

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The introduction of the pension freedoms in 2015, along with other factors like increased longevity, means people have changed how they approach retirement. Nowadays it’s common to spot soon-to-be retirees reducing their working hours or working part-time, balancing their extra free time with family, volunteering and travelling.

Approaching the end of working life is often a joyful time, but for many, it can be tricky to navigate. It brings mixed emotions. Knowing what age to retire, for example, can be difficult to decide, along with understanding exactly how much money is required to fund a desired retirement.

And alongside the money worries are structures being left behind: of a daily routine, a place of work and a job that is often hooked onto a feeling of purpose.

Client concerns around retirement

We think we can help people feel safer and more secure in their retirement choices. But first, we wanted to better understand how savers felt about retirement in general. To gain better insight, we, along with Fidelity, sponsored AKG as they quizzed consumers on how they are planning for retirement. Or, more specifically, how they view the freedom they have when accessing their pension savings, and what makes them anxious about retirement in general.

We also surveyed financial advisers on various topical issues, ranging from whether pension freedoms have had a positive impact, to the concerns their clients have at when they’re retiring and what retirement income products and solutions they need.

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Perhaps unsurprisingly, the cost of retirement was the biggest concern on the minds of would-be retirees. When people were asked what particularly worried them about retirement, nearly half (45%) cited the rising cost of living, 43% were concerned about running out of money, and a third (31%) stated paying for care in old age.

With the cost-of-living crisis ongoing, making everyday things like energy to the food shop more expensive, it’s no shock to hear these concerns.

With cost pressures felt intensely, it follows that many consumers reported not feeling especially confident about their retirement. Two-in-five (39%) non-retired respondents felt they did not have enough savings to afford their ideal lifestyle at their planned retirement date, while a quarter (23%) said they weren’t sure. The remaining 38%, however, believed they had their finances organised for their goal retirement.

The good news is that consumers appear to be aware of the cost of retirement and, despite initial fears that the pension freedoms might prompt new retirees to splash out on big ticket items, understand the importance of making their savings last. Two-in-five (41%) said they viewed retirement as a time they will need to budget carefully, compared to a third (30%) who thought of it as an invitation to enjoy their savings and spend freely.

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While it was reassuring to hear that consumers understood the need to budget in retirement, it was disheartening to hear of a general lack of awareness and understanding around pension freedoms. When asked how aware they were about how the freedoms changed things for retirees, well over a third (39%) were not even aware of the changes – and of the 47% who said that they were aware, a fifth were not sure how this impacted them. This suggests changes to legislation and regulation can be better communicated, or else it risks going right over the heads of the very people who are meant to benefit.

Despite being aided by a professional, choosing the right time to retire remained a concern for 39% of clients. This demonstrates what an important and pivotal decision stepping away from the workplace is, and how cumbersome the decision can feel to those approaching the end of their working life.

Rebalancing retirement

Retirement gives people the freedom to choose how to spend their time in a way that means the most to them. Whether that be more time with family, travelling, embarking on a passion project or volunteering for a cause close to their heart. With that freedom, however, comes the need for prudent and thoughtful retirement planning.

These data-led insights help us at Standard Life to work harder with advice firms to implement compelling retirement income solutions that best meet the needs – and the emotional expectations – of those clients nearing and in retirement.

The right products are necessary to support the changing needs of clients in retirement. And it's why we’ve switched up the way we think about delivering income and introduced a strategy and suite of innovative products to help rebalance retirement.

Rebalancing retirement is a simple time-segmented framework and a way for advisers to help build, manage, and maintain a retirement income for their clients over time. It allocates wealth into four distinct purpose-driven buckets, making it easier for you to identify ways to meet client needs at various stages of retirement.

To find out more about our rebalancing retirement framework, with a suite of guides to help support you with a range of examples, visit our website to learn more about how you can help rebalance retirement.