If the pandemic has made you reassess your life plans in recent months, you aren’t alone. According to figures reported in Reuters, one in eight Brits have had to change their retirement plans due to the impact of the coronavirus and subsequent lockdowns.
In recent months, the pandemic has made many significant changes to the way we live and work. But one of its biggest impacts has been that many people have had to revaluate their life plans in light of the economic impact of the virus.
When things are unstable, it’s important to have the confidence and reassurance that working with a professional can give you. Read on to find out why the pandemic means you need financial advice now more than ever.
The pandemic has made many people reassess their financial plans
The economic shock caused by the pandemic, and subsequent lockdowns, has had a significant effect on many people’s wealth.
According to the Guardian, the FTSE 100 fell by 14.3% in 2008, which is the largest financial downturn since the 2008 financial crisis. This has meant that the value of many people’s portfolios has suffered.
Furthermore, many households saw a fall in their income during the pandemic as people lost their jobs or were furloughed with reduced wages. This has meant that many people have had to dip into their savings to make ends meet.
This shock has meant that many people have now gone for an “all or nothing approach” to retirement. Some have brought their plans forward while others are concerned that they’ll never be able to retire.
According to a survey by Hargreaves Lansdown, reported in FT Adviser, the number of people who want to stop working between the age of 50 and the State Pension Age had more than doubled since the pandemic began. Conversely, the number of people who want to remain in work has also increased.
Sarah Coles, a financial analyst from Hargreaves Lansdown was quoted as saying “For some people, [the pandemic] has opened their eyes to the compromises their working life has forced on them, so they’re keen to leave it all behind as soon as possible.”
However, she also acknowledges that the social isolation of remote working has also reminded many people how much they enjoy seeing their colleagues at work. This explains why the number of people who want to work until State Pension Age has also gone up.
Seeking professional advice can help you if you’re concerned about a pension shortfall
As a result of the pandemic, many people have had to cut back on their pension contributions in order to save money. This has made some people concerned that they won’t have enough when the time comes to retire.
According to a report by the Financial Conduct Authority, 6% of adults who were paying into a defined contribution pension had stopped doing so by October. On top of this, a further 10% said they had reduced their contributions.
If you’re concerned that the pandemic has negatively impacted your retirement prospects, then you may benefit from speaking to a financial adviser.
Working with an adviser can help you to manage your money more effectively, enabling you to make up for any breaks in your contributions caused by the pandemic.
According to a 2019 study by the International Longevity Centre, people who sought financial advice were better off by around £47,000 on average over the course of 10 years. This was because many people felt more able to take risks when investing, due to the confidence that working with a financial professional gave them.
Of this amount, £31,000 was pension wealth, which can be useful for making up for any periods in which you didn’t make contributions.
Working with a professional can help to ensure your retirement is sustainable
Working with a planner can be equally valuable if you’re hoping to retire early. If you are, then there are many different things to consider, which is why it can be helpful to work with a professional.
For example, do you want to have a traditional “cliff-edge” retirement, or would you prefer a more phased approach? Slowly reducing the hours that you work, or working in a consultancy role, can give you the opportunity to continue to see your friends and colleagues while also allowing you to keep building pension wealth.
On top of this, working with a planner can help you to ensure that you have enough to enjoy a comfortable and sustainable lifestyle in retirement. This can enable you to rest easy knowing that you’re free to enjoy the rewards from your lifetime of hard work.
Get in touch
If the pandemic has made you reassess your retirement plans, get in touch. Please email email@example.com or call 0115 933 8433.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.