A flexible approach to guaranteed income
Everyone’s view of their retirement is different. Your clients’ actions are often driven by their individual ambitions – and a desire to have enough income to live well in retirement, even as their circumstances change.
It’s the duty of our industry to provide people with the solutions they need to achieve their retirement goals. However, later life can also bring different attitudes to risk. Changing personal situations could mean that more clients feel the need for products that can provide income security, but also the flexibility to adapt their plans after a fixed term. They therefore might want to consider guaranteed fixed-term income options.
Are attitudes towards guaranteed retirement income changing?
The high cost of living and uncertainty in the markets is making it harder for retirees to keep up with their essential outgoings. In fact, we found the number of retired people aged between 55 and 64 who had chosen to move back into working life almost doubled from 2022 to 2023 – growing from 6% to 11%1.
With interest rates still relatively high, a guaranteed income for a fixed term can be an attractive, viable option for clients who are not ready to commit to guaranteed income for life products, but who crave the reassurance of a regular income that will meet their essential needs and fit their current plans.
But we know that only covering the essentials is not what most retirees have in mind. After all, living well often goes beyond the basics. The cost of travel and adventure, or just more time spent on hobbies and activities with the family can add up over time.
According to our research, around 70% of Baby Boomers and Gen Xers say that the ideal for them would be having a retirement income that has enough guaranteed to cover their essentials but offers flexibility for their other spending too1.
A way to balance your clients’ retirement
The Standard Life Guaranteed Fixed-term Income product could be a key tool for advisers looking to create balance within clients’ pension portfolios and fulfil the FCAs’ requirements towards the consideration of retirement income solutions.
For example, for clients who are taking a step back from work, it could provide a short-term guaranteed income to bridge the gap in salary and ease their transition, while protecting their current lifestyle. And the option to combine a guaranteed fixed-term income product with other retirement solution products can help provide ongoing assurance to clients who want to feel in control of their income throughout their retirement journey.
The need for pension reviews when clients reach the end of their chosen fixed-term provides a natural opportunity for adviser firms to make sure a portfolio remains fit for purpose throughout a client’s retirement. After all, regular fact-finds and reassessment of clients’ retirement income needs were both key points highlighted in the FCA’s recent thematic review of retirement income advice.
We’ve expanded our suite of retirement income options to include a Guaranteed Fixed-term Income product to help more of your clients feel secure in later life.
Visit our website to find out more.
Source:
Standard Life Retirement Voice research report, 2023.
Sometimes, good things don’t need to last forever
