Three in five retirees lack confidence in their spending decisions, according to new research.
Just 38% of 1,000 retirees surveyed told platform Wealthtime that they are confident they are spending the right amount.
A quarter (24%) said they believe they are spending less than they could comfortably afford, while a further quarter (24%) worried they are running down their retirement assets too quickly. The remaining 11% did not know if their spending is sustainable.
When questioned further, just over a third (38%) had a precise figure of what they could safely spend each year. A further 26% knew a broad range, but a third (36%) had either a rough feeling or no figure at all.
The research demonstrated the value of an adviser for retirement planning as currently advised clients were almost three times more likely to have a defined annual spending figure (71%) than non-advised retirees (24%).
However, the confidence provided by advice did not last long.
Among advised retirees, half (50%) said the confidence they feel following a review will fade within six months, including a quarter (27%) who said it fades within three months.
Even when advisers tell clients directly that they can afford to spend more, only 52% increased their spending and keep it up. A quarter (27%) lifted spending temporarily and 21% did not change their behaviour at all.
Michael Milner, head of platform proposition at Wealthtime, said: “Our research shows that, especially for advised clients, the problem is not a savings gap, it is a confidence gap. The regulator’s focus on decumulation advice is about ensuring income is sustainable. It highlights the importance of cashflow modelling, while also demonstrating that retirement planning is not solely a technical conversation.
“Advisers are already doing the hard work in creating a suitable long-term plan, but many clients are missing the permission to act on it and, as a result, are losing out on the lifestyle they want to enjoy in retirement.”
Ad Lucem surveyed 1,000 retirees over the age of 55 with at least £100,000 in qualifying non-pension investible assets on behalf of Wealthtime.
