With a large number of UK adults – including nearly a third of those over 60 – never having sought financial advice, many could be in a “precarious position” come retirement, according to a study.
Three in 10 Brits aged over 60 have never taken financial advice, along with nearly a quarter (24%) of those aged 35 to 59, according to a survey of 1,022 people by Kreston Reeves.
A third (32%) of those over 60 and over a third (36%) of those aged 35 to 59 simply believe they have “just enough” in pensions to fund the retirement they hope for, the survey found.
Meanwhile, others are “placing an over-reliance” on the state pension. A two-thirds (64%) of those over 60 said they will rely on the state to fund their retirement, while a third of those aged 35 to 59 agreed.
This is worrying as “we can expect [the state pension] to become less valuable over time and accessed at a much later age,” said Daniel Grainge, partner and head of tax at Kreston Reeves.
The survey also found those aged 35 to 59 are more likely to draw upon a “wide range” of investments – such as savings, personal investments, property, and inheritance – to fund their retirement.
Despite never having had their finances looked at by a professional, half of the respondents said they are “confident” their financial affairs are in order.
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On top of this, 54% believe they are “cautious” when it comes to financial risk. However, the assets they hold “suggest otherwise,” said Kreston Reeves.
But Grainge said: “With the range of threats highlighted in our survey, it is worrying that such a large proportion tell us that they have never taken financial advice, compounded further by the belief that they are confident that their financial affairs are in order.”
The survey also found COVID-19 pandemic has largely left investors’ attitudes to risk unchanged in those aged over 60. However, over a third (37%) of those between 35 and 59 said they have adopted a “more defensive approach.”
While many describe their investment approach as cautious, it is likely many have differing definitions of what they consider to be caution, the financial expert warned.
“Our report shows some risks – such as the risk of inflation eroding capital over a long term period – are often being overlooked,” said Kim Williams at Kreston Reeves Financial Planning.
“A good financial planner will take the time to understand personal objectives, circumstances, preferences and timescales before constructing a well-diversified investment portfolio which should be professionally reviewed at least annually to ensure it remains aligned.
“Current economic volatility highlights the need for this in ensuring plans for the future are not compromised.”
The survey also found that many Brits aren’t paying enough attention to later-life planning measures. For example, a whopping seven in 10 (68%) Brits over the age of 60 do not have a power of attorney in place.
Meanwhile, six in 10 (58%) of people overall have not even thought about long-term care planning.
Over half (51%) of repondants admitted they don’t know what their inheritance tax exposure is. What’s more, of those who claimed they do, their estimated exposure was in accurate based on their reported assets.
And, over two in five (42%) of those aged 35 to 59, along with 16% of those over 60, do not have a will, the research found.
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