Help! I’m 50 and I don’t have a retirement plan

Sanlam’s recent research study, “What’s Your Number?” found that a disturbing 18 million UK adults under the age of 55 have not set a target for their retirement savings. That’s a lot of people setting themselves up for a significant disappointment in later life. With a global pandemic at large, now may feel like a strange time to embark on a new savings plan. But it is a fantastic opportunity to review your finances and make some important changes that will stand you in good stead for the rest of your life.

I’m saving into a pension, which means I’m fine – right?

In recent years, the government has made great strides in getting people to save for retirement. Auto-enrolment became a reality in 2012, and all companies are now legally obliged to enrol their employees into a pension scheme, so they receive tax relief from the government and hopefully employer contributions too. But the reality is that saving into a pension, while clearly the right thing to do, may be lulling people into a false sense of security – especially if they didn’t start saving until later in life.
When asked the question, our study found that only 40% of 45-to-64-year-olds have any confidence they’ll be able to save enough money to retire when they want. The fact that so many people in this age bracket don’t have a target or a plan for financing their retirement is a huge concern. Simply saving into a pension is not enough if it turns out those savings will not last. At best, you will need to work longer. At worst, you could fall into a poverty trap in later life.
Admittedly, you may not be feeling confident about investing money in the stock market right now. But markets have always moved in cycles and investing now – when stock market valuations are low – is actually a very good time to increase your contributions. Especially if you are still 10 or more years from retirement.

Why are people not seeking financial advice?

The first port of call for a structured retirement plan should be a qualified financial adviser. But the reality is there are significant barriers preventing people from seeking help from an expert. Our study found that nearly half of people aged 45 to 65 have never spoken to a financial adviser. The reasons cited included:

  • 34% of people thought they could manage their pension plan themselves

  • 32% felt that advice would cost too much

  • 29% are putting it off for later

  • 24% don’t trust a financial adviser

  • 24% didn’t realise a financial adviser could help

 These reasons are not new and are largely a hangover from the days when many advisers were commission-hungry and did not hold relevant qualifications. But times have changed. Financial advisers are well-qualified and regulated, and the Financial Conduct Authority (FCA) has laid out clear guidelines around the product knowledge advisers must have, and how they rationalise their recommendations.

We can help you build a financial plan to give you greater financial resilience and peace of mind in later life. Speak to one of our expert financial advisers today and get your finances on track.
Get your finances on track

How a financial adviser can change your life

Far from being the reserve of the wealthy, we think everyone should seek expert financial advice for their retirement planning. It’s too important to get it wrong. Here are some of the key benefits of doing so:

Do you really know your subject matter?

You may think you can organise your financial plans yourself, but there is a huge amount of legislation and taxation around pensions and investments, all of which change over time and according to your circumstances. Seeking the help of an expert gives you peace of mind that you’re not going to unwittingly fall into a tax trap, make an irreversible investment decision, or lose invaluable pension income guarantees. Financial advisers can also have access to products and services that you can’t access as a private investor.

It’s a journey, not a destination

The last few weeks have underlined the fact that our personal and financial circumstances can change at any time, and often without warning. Financial planning never stops. Decisions you make today may well need to be reviewed in the future, and your circumstances will continue to change well into retirement. A good adviser will tailor their recommendations according to your life stage and will be your financial partner for many years to come. They are also important in times of market uncertainty. Selling out of your investments during these times can be hugely damaging. An adviser can help you stick to a long-term plan and remind you that market risk is part of the process.

There’s more to financial advice than investments

Financial advice is about much more than investments. A good adviser can help with every aspect of your financial life including life and health insurance, tax, estate planning, charitable giving, family trusts etc.

Regain control

Most people are guilty of burying their heads in the sand when it comes to retirement planning, despite being fully aware that they need to do something about it. This can be a source of worry and stress. Hiring an expert is part of taking back control of your finances. And never has the adage “better late than never” been so apt. The sooner you are aware of any shortfall, the sooner you can put plans in place to address that shortfall. Who knows, you may even have a surplus. Whatever your situation, the worst thing you can do is sleepwalk into retirement.

Without targets and a plan, your retirement is in the lap of the gods

Our study found that those who haven’t received advice are far less likely to know their primary goals for retirement, and far more likely to believe they have left it too late to achieve the retirement they want. By setting clear, achievable financial targets, people can be more realistic about when they can retire and how much income they can expect to receive. The journey to this destination is likely to be both more relaxing and more likely to succeed.

Make your money work harder

While most people worry about the cost of paying an expert for financial advice, what they don’t realise is that the returns and peace of mind they can achieve can easily outweigh the cost of advice. For every scare story of an adviser who has made the wrong investment decisions, there are hundreds of examples of people who have made excellent, tax-efficient returns.

The data speaks for itself

According to our survey, 88% of longer-standing advised clients are either happy or very happy with the state of their finances. And according to advisers, 87% describe their average client’s state of readiness for retirement as ‘prepared’.
If you are one of the 18 million adults yet to plan for retirement, we urge you to take control of it now.

Michael Angus
Wealth Planning Director

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