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1 Financial Resilience in Retirement Jane Vass Age UK and Chair of Older People in Retirement Steering Lucy Malenczuk Age Monique Rotik Collobrate #TalkMoney #FinCap17

2 Financial Resilience in retirement Monique Rotik Founder and Researcher Collaborate Research

3 Stage 1 research November 2017

4 About this research Research aim To identify want constitutes an OPIR who is well placed to deal with life events and financially resilient Taking account of differences in resources, acknowledging the heterogeneity of the OPIR population Method Rapid Evidence Assessment (REA) which identified 120 relevant sources 13 tele-depth interviews with expert stakeholders drawn from government, academia/think tanks, third sector and industry Stage 1 conducted Oct-Nov Second stage planned Dec 17-Feb 18 involving qualitative research with OPIR to develop further insight 4

5 What can OPIR expect during retirement? Range of events Complex decisions Two stages Combination of routine occurrences, adverse events and progressive changes Many events unpredictable and difficult to plan for Managing and making most of existing resources Balancing current and future considerations More challenging choice environment since pension freedoms Early retirement vs. later stages, each with distinct priorities and pressures But people don t know what to expect through different stages Longer-term planning identified as a gap 5

6 What constitutes good outcomes for Not running out of money Maximising income Financial resilience and wellbeing OPIR? Not over or underspending Broader goals Being satisfied and not anxious Feeling secure and in control Being well placed to cope with life events Having a good range of resources Having choices Understanding financial products and options Having financial plans Having a financial buffer against shocks Achieving aspirations Remaining independent Maintaining quality of life 6

7 What behaviour is required to achieve good outcomes? Balancing short-term and long-term Timely, pre-emptive decisions Avoiding poor decisions Being careful about what you spend and save. Being able to trade off immediate consumption for longer-term benefit. (Expert from government) No one makes good decisions if they re in a state of emotion. They would feel more proactive if they engaged at an earlier stage. (Expert from industry) The typical person sees no point for leaving money for later. They feel fatalistic and that they may as well enjoy this now because who knows? Some don t want to pay for care and put their money into trust which then reduces their choices. (Expert from industry) And accessing external guidance and advice where required 7

8 What are the enablers of the required behaviour? Ability Mindset General financial skills Digital skills Awareness of guidance and advice Ability to identify and resist a scammer Positive but realistic attitude Confident (but not overconfident) Willing to talk about money and to ask for help Inclined to plan and consider risks Adaptable to changes Planners are likely to be better placed as they re thinking ahead all the time and don t have their head in the sand. (Expert from government) People need to be practical and not to think it will never happen to me. (Expert from industry) 8

9 What else could affect financial resilience and wellbeing? Financial resources Inhibitors and barriers The (regulated) advice gap Personal attributes Health resources Mistrust of products, providers and advisers Cognitive biases and inertia Social resources Societal reluctance to consider and discuss care Financial position and abilities largely determined in earlier life stages 9

10 What interventions could help? 1 Little definitive about impactful interventions but some anecdotal evidence 2 Tailored support that considers circumstances holistically seen to have most value 3 An important initial objective is raising people s awareness of what to expect 4 Opportunity identified to tap into teachable moments, starting pre-retirement 5 But will require more than just efforts to raise financial capability 10

11 Thank you #TalkMoney #FinCap17