More than a million pensioners (1) are financially reliant on friends and family, with the next generation even more stretched, according to the latest research from LV=.
LV=’s annual State of Retirement report, released today, shows that one in 10 (11%) pensioners are reliant to some degree on friends and family for financial assistance. (2) While this suggests the vast majority are able to remain financially independent in retirement, worryingly, those due to retire within the next 10 years are almost three times as likely to be in this situation (27%).
At the same time, there is a general trend of people turning to their nearest and dearest for advice about their finances, rather than professionals. Six in 10 (60%) existing pensioners took financial advice from non-professional sources – such as friends and family – and three quarters (72%) of those approaching retirement plan to do the same. Only a quarter (25%) of over 50s have taken, or plan to take, professional advice about their retirement, despite the fact that this could help them get more from their money.
Reforms to the pension system in recent years have increased choice and made it even more important people are able to access this support. More than four in 10 (45%) people approaching retirement say the reforms are too difficult to understand without professional help.
Cost is often the main barrier to advice but new, affordable solutions, like LV=’s Retirement Wizard, are helping make regulated advice accessible to the mass-market. These developments will be crucial if those approaching retirement, who otherwise might find themselves reliant on friends and family for money, are to get the help they need to make sure their savings work hard.
Those who do take regulated advice certainly see the value in it, as over the last two years the number of those approaching or at retirement who felt financial advice was ‘worth the money’ has nearly doubled (3).
John Perks, Managing Director of Retirement Solutions at LV=, said: “A significant minority of pensioners rely on loved ones to help them financially during retirement and those approaching retirement seem to be in an even worse situation. Yet equally worrying is that people are also far more likely to take financial advice about retirement from friends than from a professional. Given the increasingly complex choices consumers have to face about their pensions, and with the economic impact of leaving the European Union still unknown, we believe it’s never been more important consumers have access to professional advice at retirement.”
The research is part of LV=’s annual State of Retirement study, which this year outlines nine common ‘states’– or typical financial situations – retirees fall into, including the one in 10 who are ‘Reliant on Others’. The remaining eight states are:
The full report looks at these ‘States of Retirement’ in detail, as well as more detail on why states will be more or less common among the next generation of retirees.