A recent study by Aviva and Age UK has found that many mid-retirees in the UK are not prepared for the financial challenges of retirement. The survey of 1,000 mid-retirees (aged 65-75) found that almost two-thirds (64%) have not had essential conversations with family or friends about managing their financial affairs should they become unable to do so independently. Additionally, only a third (36%) of mid-retirees know all the details of their partner’s pension, and more than four in five (84%) have not checked to see if their partner has nominated them as a beneficiary for their pension.
The study also found that 81% of mid-retirees do not have a lasting power of attorney (LPA) in place, which can leave them vulnerable to financial difficulties if they become unable to manage their affairs. Furthermore, nearly four in ten (39%) have not considered how they will manage their finances as they grow older, particularly into their 80s or 90s.
The report highlights the importance of making informed decisions in later life and the value of approaching these conversations together, to ensure long-term financial security for both partners. It recommends a new retirement income approach, which includes a “flex first, fix later” strategy, combining pension drawdown in the early retirement years with a later-life annuity. This approach can provide pension savers with a sustainable income for life and offer better outcomes.
Aviva and Age UK are working together to consider the feasibility of a mid-retirement MOT, which could provide guidance and support to mid-retirees on topics such as estate planning, fraud prevention, and managing finances in the event of cognitive decline. The organizations are encouraging mid-retirees to plan ahead, including taking out a lasting power of attorney and budgeting for potential costs that can arise in later life.
Aviva has also provided top tips for managing pensions throughout retirement, including understanding what will happen to retirement income if either partner dies, reviewing pension plans regularly, and considering all sources of retirement income. The organization is also developing its own “flex first, fix later” product, called Aviva Guided Retirement, which aims to provide its workplace pension members with a sustainable income for life.
Overall, the study highlights the need for mid-retirees to take control of their financial planning and to have open and honest conversations with their loved ones about their wishes and plans. By doing so, they can ensure that they are prepared for the financial challenges of retirement and can enjoy a secure and sustainable income in their later years. Age UK is urging people to plan ahead and is offering advice and support through its Advice Line on 0800 678 1602.