People around the world are becoming more aware of the fact that they are more likely to live for longer. In some countries, this is driving demand for retirement advice.
In the UK, for example, a recent report, conducted by research firm, NextWealth, and sponsored by Aegon UK, found that a majority of advisers (67%) said that an ageing population and medical advances were the main drivers of demand for retirement advice. This ties in with Aegon UK’s Second 50 report which highlights the value of advice when navigating the many variables in life after 50.
Steven Cameron, Pensions Director at Aegon, said: “Once again, this year’s report highlights the importance and vibrancy of the retirement advice market, with many factors contributing to healthy demand. The most significant driver of demand for retirement advice is the ageing population and medical advances. People are on average living longer and having to bear more of their own financial risks, which means that making informed retirement decisions has never been more important or personal to each individual.”
At Aegon, we see longevity, and changing life patterns as an opportunity for our customers, our employees, and society as a whole. Increased longevity opens up more opportunities for people to live multistage, longer, and more fulfilling lives. And we want to help support as many people as possible in building the financial means to explore those possibilities, while managing potential challenges of a long and varied life.
Need to plan
To get the most out of their extended lives, people need to plan ahead to build solid financial foundations, as evidenced by the research carried out by the Transamerica Center for Retirement Studies (TCRS), an operating division of the Transamerica Institute®, which is a nonprofit, private foundation dedicated to identifying, researching, and educating the public about health and wellness, employment, financial literacy, longevity, and retirement.
TCRS’ 23rd Annual Retirement Survey compared the retirement preparations and expectations of US workers over the age of 50 with the experiences of retirees. The report reveals several insights, including common pitfalls that could be avoided through more rigorous planning, such as:
- Being overly optimistic about retirement expectations.
- Overlooking life expectancy and how it relates to time in retirement.
- Claiming Social Security benefits too early.
- Failing to seek assistance from a professional financial advisor, if needed.
People need to take action
The need for people to take action is further evidenced by a recent study in the UK that showed a slight decrease in the percentage of assets for clients receiving retirement advice, while research conducted by Aegon THTF, together with the China Center for Insurance and Risk Management at the Tsinghua University School of Economics and Management, showed a decrease in the overall preparedness of retirees in China, especially in regard to retirement planning. And, in the US, research by TCRS, found that fewer than one in four workers aged over 50 and retirees were very confident they will be able to maintain a comfortable lifestyle throughout their retirement.
“Retirement brings freedom and time for pursuing personal passions. While our research finds that retirees are happy, purposeful, and have a positive view of aging, many pre-retirees and retirees are experiencing pitfalls that could be potentially mitigated through improved planning,” said Catherine Collinson, CEO and president of the Transamerica Institute and the TCRS.
Pension reform
Moreover, the demographic shifts that result from increased longevity are, in many places, putting additional strain on traditional state-based pension systems. This is in turn driving policymakers around the world to initiate the move to multi-pillar systems which include private pension savings. This further increases the need for individuals to plan ahead and build the foundations that will enable them to live their best lives in retirement.