3rd November 2014
Millions of Britain’s retirees endure significant life changes in the early years of their retirement and unfortunately for some many witness a marked deterioration in their health.
Research from retirement specialist LV= revealed that within the first five years of retirement, almost a third of retirees, at 32%, see their general health worsen.
This figure was significantly higher for those retirees living in Scotland, at 44%, closely followed by retirees in Yorkshire and Humberside, at 43%.
The research also revealed that 9% of British retirees had contracted a serious illness within the first five years of retirement and one in 20 had suffered bereavement, losing their husband or wife, with this figure doubling when applied to the North East.
These changes can heavily impact a retiree’s financial situation and alter the most appropriate way of structuring their retirement income.
The need to financially support others in early retirement was also cited as one of the key changes retirees’ face, with over a quarter stating that they had financially helped family members. Retirees in London were most likely to have provided their families with financial support with those in Wales least likely to have been called upon. In addition, for nearly a third of retirees a grandchild had been born.
Living arrangements also commonly changed in early retirement. Nearly a quarter of retirees significantly updated/renovated their home or garden whilst under a quarter had moved home.
Commenting on the research, Richard Rowney, LV= life and pensions managing director said: “Although retirement is often seen as a time to take your foot off the pedal there are often life changes that occur that could lead to financial upheaval. It is therefore essential that retirees have a degree of flexibility around their finances so they can adapt to a change in their needs.
“The majority of retirees opt for a conventional lifetime annuity when it comes to retirement, which isn’t the best decision for many due to the lack of flexibility it offers. Although the Chancellor’s radical overhaul of pensions announced earlier this year is expected to change this trend, it is essential that people do their homework and don’t just opt for the annuity offered to them by the company they have saved a pension with.”
Naturally, with people spending longer in retirement it is inevitable that retirees will see their circumstances change at least once.
“We would always recommend that people seek financial advice and consider all the options including fixed-term annuities, investment-linked annuities or income drawdown in order to ensure they are able to structure their income in a way that best suits their needs,” added Rowney.