Failure to take professional financial advice is costly
Retirement savers are shunning professional advice and could be losing out on thousands of pounds of income every year in retirement. Many take advice from the wrong people or do not bother at all, says a new survey by pension provider LV=.
The firm has corralled retirement savers into nine groups based on how they are planning their finances for when they stop working.
Which group they are in often decides whether they ask for help and understand the finer points of funding their retirement with special tools, like the Qualifying Recognised Overseas Pension Scheme (QROPS) for expats.
What sort of pensioner will you be?
Here are the groups:
- Property pensioners – These rely on their homes to fund their later years by selling, downsizing or equity release (22% of retirees)
- Grey-collar workers – Retirees who carry on working to top-up their pensions or just to earn some money to pay the bills because they do not have enough savings (8%)
- Taking hand-outs – Retirees needing financial help from friends and family who are not financially ready to give up work (11%)
- Fall shorters – These simply have not saved enough to fund a comfortable retirement (24%)
- Active investors – Pensioners who are well-off and can afford to invest some cash to add to their savings (9%)
- Gold-plated – Pensioners with ample final salary pensions that pay out high incomes and have extra benefits (24%)
- Relying on the state – Those that count on the state pension as the bulk of their income (43%)
- Overloaded with options – Retirees who do not understand pension freedoms and the financial options open to them who feel out of control of their destiny (19%)
- Second home owners – Buy to let landlords and holiday let owners who have the choice to live off the income their properties generate or to sell them to increase their capital (7%)
The survey also revealed that only one in four over 55s approaching retirement is considering taking professional financial advice even though 45% believed their financial choices were too confusing.
When asked why they would not take advice, a fifth resented paying a fee. Current pension freedom rules make seeking advice from a professional compulsory for retirement savers with pot worth more than £30,000.