Recent research carried about by Defaqto has uncovered that 44% of those aged 55 to 64 have not received any advice with regard to financial planning in retirement. Given that 2011 will see a record number of people retiring, this figure shows that much more needs to be done to educate those approaching retirement about their financial options.
One of the major considerations for retirees will be how to invest their pension, should they have been paying into a defined contributions pension scheme. For most retirees the most suitable option will to buy an annuity. However, with the majority of retirees not receiving any formal advice with regards to financial planning, many will fail to use the Open Market Option (OMO) when buying their annuity. This causes thousands of retirees to miss out on a potentially higher income, as they did not compare rates from rival providers.
Matt Ward from the company that carried out the research summed up the importance of getting good financial advice in retirement. He said that…”….the day someone retires represents one of the most important decision-making points of their life and a period when they need the most financial guidance. However, the majority of people nearing retirement that we surveyed hadn’t sought professional advice in this area.”
Of course financial advice doesn’t come for free if sought from an IFA, but when it comes to shopping for an annuity a lot of what you need to know can be found online.