Your clients could gain 6 extra retirement years with one simple move. Here is how

It can be difficult to measure the value of financial advice for those who have never experienced its many benefits.

Fortunately, a recent study published by Standard Life has found that taking advice can reward clients with something amazing: six extra years of retirement income.

This research could be key for your clients to understand just how valuable working with a financial planner can really be, and may encourage them to seek advice – especially if they are looking to retire in the next few years.

Indeed, while the cost of living remains high, your clients’ retirement plans could be called into question, and they might need advice from a seasoned professional who can guide them through.

Read on to find out some of the key retirement concerns that your clients could face today, and how this study’s findings could reveal the powerful outcomes that financial advice can offer.

The high cost of living could make future retirees worried about affording their lifestyle

Retirement is a highly anticipated milestone that your clients are likely looking forward to, but while experiencing today’s rising costs, they could be questioning the affordability of their plans.

The Office for National Statistics (ONS) reports that UK inflation reached 8.7% as of April 2023, meaning the UK remains the country with the highest inflation in the G7, the Guardian reports.

This high rate of inflation could have a serious impact on your clients’ retirement plans. A Guardian report states that in 2022, the minimum annual living cost for a single pensioner jumped by 18%, and for couples, the cost jumped by 19%.

Plus, with markets proving volatile throughout 2022, your clients’ pensions may have experienced a downturn in value recently, further intensifying their affordability concerns.

These factors could mean your clients can afford to fund fewer years of retirement, and may prompt them to stay in work even longer than they already have.

However, according to the Standard Life research, taking financial advice can provide your clients with additional years of retirement income, perhaps leaving them more capable of handling the rising cost of living as a retiree.

Financial advice could help your clients fund six more years of their retirement, a recent study has found

The Standard Life research, published in March 2023, found that participants who had taken financial advice said they could fund their retirement for 23 years before having to make cutbacks. Those who had not taken advice, on the other hand, said their retirement income would last only 17 years.

What’s more, advised participants said they expected to retire at an average age of 66, whereas those without a financial planner said they hoped to retire at 69.

The study goes on to detail why the advised participants felt more confident about funding their retirement lifestyle. It reveals that 45% of people who worked with a financial planner went on to write a “plan detailing spending in retirement”, as opposed to just 18% of unadvised consumers who did the same.

What’s more, this increase in preparedness has a tangible effect on the enjoyability of retirement, the study claims.

The research reports that:

• 96% of those who did “a great deal of financial planning” were enjoying their retirement
• 82% of participants who did “a small amount of planning” agreed
• Only 72% of those who did “no planning” said they were happy in retirement.

All in all, the study suggests just some of the powerful advantages your clients could experience from financial planning.

3 key ways a financial planner can help your clients prepare for retirement

If your clients are on the approach to retirement, it is important to understand the key ways that advice could benefit them.

1. Financial advice can help ensure your clients are using their tax-efficient allowances

Your clients may be missing out on cost-effective tax allowances that might lower their overall bill.

For example, as of 2023/24, your clients can pay up to £60,000 a year, or their total earnings (whichever is lower), into their pension while receiving tax relief.

Knowing how to maximise this and other key allowances can help them save more efficiently for later life.

2. A financial planner can assist your clients with prioritising their goals

When your clients plan their retirement, they may struggle to form a coherent plan that prioritises their biggest goals.

In the study, retired participants listed their regrets, which included 23% of non-advised customers saying they wished they’d planned for retirement more thoroughly.

A financial planner can listen to your clients’ needs and formulate a retirement plan that places these goals at the epicentre, so that your clients can proactively pursue them throughout the coming years.

3. A planner can use cashflow modelling software to project your clients’ prospective retirement income

Another important finding from the Standard Life study is that 23% of unadvised participants said they needed more money in retirement than they’d anticipated.

Fortunately, many financial planners use specialist software to help your clients see what their retirement could cost.

This is called “cashflow modelling” software, and it can project key potential factors of your client’s financial future. These may include when your client may be able to retire, how much income they may have each year, and how inflation could affect their savings.

Cashflow planning can help give your clients a realistic image of how their retirement might look, potentially boosting their confidence and motivating them to plan ahead.

Get in touch

We’re here to advise you and your clients on all aspects of financial planning. If you have clients that would benefit from advice, or you’re interested in how you can work more closely with us, please get in touch. Email enquiries@prosserknowles.co.uk or call 01905 619 100.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate cashflow planning.