25th June 2014
Age UK is calling for a new approach to financial planning that builds up resilience later in life. It says that ill-health, divorce or the death of partner can derail someone’s financial plans overnight as show by its Financial Resilience in Later Life report, published today.
These factors are especially harmful when combined with retirement, which now routinely lasts 30 or 40 years for a growing number of people.
The report calls for a new approach to financial planning that concentrates on building resilience rather than developing a single ‘plan’ for retirement.
Age UK believes periodic financial MOTs and guidance in the lead up to retirement and in retirement are essential to ensure people are more financially resilient and better able to weather what life throws at them.
These ‘road-checks’ are particularly important for those with modest savings, many of whom will not have used traditional financial advice.
Latest figures show that two thirds of people in the UK do not take professional financial advice – marginally down on figures for 2012.
The report is the culmination of Age UK’s Financial Services Commission, a series of 3 summits involving industry leaders, Government, consumer advocates and older people.
Inspired by Lord Filkin’s warning last year that Government and society are ‘woefully unprepared for the UK’s ageing population’, the Commission’s objective was to devise ways to help people manage and prepare for retirement now that they are living longer than ever.
Tom Wright, Age UK Group Chief Executive and Co-chair of the Financial Services Commission, said: “With retirement now often lasting 30 or 40 years – a third of your life – we’re in critical need of a radical new approach to making later life financially secure and comfortable. The concept of making one set of retirement plans at pension age is not fit for purpose.
“We believe a series of financial MOTs at significant points throughout retirement, together with a robust state and private pensions system, is the real way to help people make ends meet and live comfortably.
“We hope the financial services industry, regulators and Government who worked with us during the Commission will now act on the blueprint we’ve laid out as a result of our discussions so that people in Britain can feel financially prepared for and confident about their later lives.”
Low readiness for ageing
Research shows that there is widespread concern about finances in later life. Age UK research reveals that almost 2m people in England (20%) aged between 50 and 64 – the so called ‘baby boomers’ (people born between 1946 and 1964) show very low readiness for ageing in terms of financial resources and health.
One fifth of men and two fifths of women have no private pension at all, and half of all women have a private pension worth less than £22,000 – equivalent to just £1,300 a year.
Financial Resilience in Later Life
The Financial Services Commission report says it sets out our roadmap for industry, Government and regulators to take to improve the financial resilience of our ageing society. The report calls for more honesty and transparency in financial products, particularly around investment returns.
It also warns of the growing risk of scams following the Budget announcement that pensions will no longer have to be converted into annuities from April 2015.