Steve Butler: Helping the over 55s avoid sleepwalking into retirement

There is no doubt that post-pandemic, financial support and retirement guidance will be vital for the over 50s, writes Steve Butler

The advice gap for workers in their 50s contemplating the next phase of their career and their retirement plans has been well documented.

Since the introduction of pension freedoms in 2015, savers opening their pension pots without seeking guidance has been a growing issue of concern for advisers.

With a third of the workforce aged over 50 and the fact this age group has disproportionately felt the impact of the pandemic on their pensions, savings, and retirement aspirations, is it time for advisers to work closely with employers to provide financial support to help people retire well?

The English Longitudinal Study of Ageing (ELSA) which surveyed more than 6,000 workers aged 50 plus, highlighted that one in eight (13%) have changed their retirement because of the pandemic, with 8% saying they will retire later and 5% planning to retire earlier. 

ELSA highlighted that a significant minority of older people working before the crisis have now retired. Some may well have done so anyway, but over half had not intended to, so the virus could have caused them to alter their retirement arrangements.

The over 50s have also been hit hard by redundancy due to Covid-19. Analysis of Office for National Statistics data (ONS) by over 50s website, Rest Less found that the number of unemployed people over 50 has increased by a third in a year.

This research highlights this age group will need greater financial support over the next few years, an area where advisers can be very helpful.

Plugging the financial gap

Providing financial education and advice for the overs 55s has not been top of the agenda for businesses to date.

Last year, we surveyed more than 300 businesses on their approach to financial wellbeing and found that 61% do not provide any pre-retirement or financial guidance to employees approaching the age when they can access their pension pots (55+) – leaving many in the dark about planning their financial future.

However, despite this, eight out of ten employers said their company and people would benefit from being better informed about all things financial; and retirement planning topping the list of support employers think their staff would most value.

With many over 50s now facing challenges because of the pandemic, including delaying retirement due to the impact of stock market fluctuations, declining annuity rates and low interest rates, offering financial and retirement planning is something many employees would welcome.  

Could our industry help employers better support their workforce? Surely it could be as simple as delivering financial education on subjects from debt management, budgeting and retirement planning through webinars and online meetings?

Midlife reviews

Another sensible approach would be to advocate ‘midlife reviews’ for employees who are at that point in their working lives to help them consider their future plans. This review presents an ideal opportunity for employers and employees to discuss someone’s career plans, finances, wellbeing, and retirement in the round.

We’ve found this can help both parties focus on how to get the most of their professional relationship and may prompt conversations about helpful changes to working patterns, or more flexible working options such as sabbaticals. It can also offer pointers to tailoring employee benefits to the changing needs of staff.

Providing financial education and access to advice at this stage would also help these colleagues better plan and prepare for their retirement. The earlier this can start, the better.

As people approach their later years, offering one-to-one sessions with an adviser can help them understand their pension options and help them avoid sleep walking into retirement and taking unnecessary risks with their pension pot.

There is no doubt that post-pandemic, financial support and retirement guidance will be vital for the over 50s. Advisers are likely to be in high demand to play a big part in helping employers educate their workforce, keeping them on track for the retirement lifestyle to which they aspire. 

 Steve Butler is CEO at Punter Southall Aspire