"Whilst clients may tend to understand generic information, an adviser can help plug gaps in their knowledge about risk, tolerance, tax efficiency, capacity for loss or investment strategies.”
Planning for retirement can empower workers to take a critical look at their finances and plan for the future.
This is why there are many retirement tools to help people plan for later life. These include online calculators and software programmes.
The MoneyHelper website helps workers understand pensions and includes a calculator for projecting how much income a person might receive, based on their circumstances. The public can also access Pension Wise, which is a government service that offers free, impartial pensions guidance about their defined contribution pension options.
The Pensions and Lifetime Savings Association is also playing its part in helping people plan for later life through its Retirement Living Standards, which helps the public picture what kind of lifestyle they could have in retirement.
The website allows users to see how much money they would need in retirement to live either a minimum, moderate or comfortable lifestyle. For many people, their private and state pensions and other savings could go a long way towards these costs. However, some people may need to add other costs depending on their circumstances, such as mortgage, rent, social care costs and any tax on pension income.
Alyshia Harrington-Clark, head of DC, master trusts and lifetime savings at the PLSA, says: “Up to 35mn savers now have access to the Retirement Living Standards through their pension scheme’s communications.
"From our surveys, we have found a total of 124 organisations are using the standards, including over 100 pension schemes and some of the largest and best-known industry brands.
“Among those who currently communicate the Retirement Living Standards to their scheme members, almost all say they are useful in helping members understand what to save for in retirement.
"Some employers have been able to increase contribution matching based on Retirement Living Standards analysis, whereas others have improved engagement by upwards of 30 percentage points, with some schemes experiencing increased contribution rates of over 130 per cent as a result.”
A bespoke retirement
The standard has been praised by Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, who says it gives savers a concrete idea of what is needed in terms of annual income.
However, she adds there is no such thing as a one-size-fits-all retirement. "Different people will have different ideas of what kind of lifestyle they want," she says.
"Having these figures in mind can bring people comfort that they have secured a particular level of retirement lifestyle and give them an idea of what they need to do to improve further”.
