Establishing appropriate, realistic and manageable goals for retirement

Research is being commissioned by financial planning firms in a bid to gauge what level of planning is being undertaken by individuals in preparation for retirement. This research is being undertaken with good reason as the results are proving that consumers are wildly under prepared for this milestone.

One survey revealed that the majority of retirement plans are done “in people’s heads”! Surprisingly, this trend is more prevalent among high earners - those earning more than £250,000 a year. Two-thirds of these individuals admit to not using a financial adviser at all for retirement planning.

It is a well-known fact across the advice sector, that affluent individuals and those lucky enough to be in the higher income bracket have a great deal to gain from retirement planning. The smart financial adviser will assess how to improve returns and will reallocate portfolios so they are in a better position to meet an individual’s goals. These goals could be to build a larger pension pot to retire with, or putting a plan in place to enable early retirement.

With so much at stake, it’s a given that the adviser community needs to be doing more to educate consumers on the positive impact and value that an adviser can have on accumulating wealth and helping individuals reach their retirement goals.

A financial adviser will take the time to build up a clear understanding of an individual’s savings and likely financial needs in retirement. A full retirement plan will look beyond pension products and consider all aspects of an individual’s wealth, helping him or her to become more tax efficient, take action on inheritance planning and manage risk. The adviser will recommend an effective overall investment strategy.

Good financial advice will help clients navigate a long list of their behavioural biases to help mitigate any behavioural tendencies that might negatively impact investment and inheritance strategies, for example. However, the most positive impact on retirement planning is likely to take place in the early planning phase. Individuals will often experience difficulty establishing appropriate, realistic and manageable goals. Often, they don’t even know which requirements they should prioritise or what they actually wish to accomplish.

Not surprisingly, when research is proving that the majority of financial plans are being put together in people’s heads, it isn’t possible for a financial adviser to have instant solutions. However, enlisting the expertise of an adviser in the financial planning process will make thoughts a tangible reality. Only then can people stand a chance of achieving those far reaching retirement goals.

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