Table of Contents
Executive Summary
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- Impact of COVID-19 on later life financial planning
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- Figure 1: Short-, medium- and long-term impact of COVID-19 on later life financial planning, December 2020
- The market
- The average retirement will last more than two decades
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- Figure 2: Life expectancy of males and females at age 65, 2018-based period and cohort projections, 1981-2068
- A quarter of over-50s have more than £100,000 in savings and investments
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- Figure 3: Value of savings and investments, consumers aged 50+, November 2020
- Companies and brands
- Equity release trends move towards debt repayment and gifting
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- Figure 4: Uses of equity release based on value of plans taken out, Q1 2020-Q3 2020
- Innovations in digital applications and product changes
- A sharp fall in advertising expenditure
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- Figure 5: Total above-the line, online display and direct mail advertising expenditure on later life planning products, 2015/16-2019/20
- The consumer
- Half of over-50s have made later life financial plans
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- Figure 6: Consideration of later life financial plans, September 2020
- Friends and family are the top choice for discussing plans
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- Figure 7: Sources of information consulted in relation to later life financial plans, September 2020
- Advice is not a consideration for most without a prior relationship
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- Figure 8: Plans to speak to a financial adviser about later life finances in the future, September 2020
- Two thirds don’t think they need an adviser
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- Figure 9: Barriers to consulting a financial adviser about later life financial needs, September 2020
- Half of over-50s have no clue what income they will need in retirement
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- Figure 10: Percentage of current income expected to be needed for a comfortable lifestyle in retirement, September 2020
- Securing later life income is the top priority
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- Figure 11: Later life financial priorities, September 2020
- Financial decisions are most likely to be kept in the family
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- Figure 12: Trust in other people to handle financial affairs in later life, September 2020
- More than a fifth have reassessed later life plans due to COVID-19
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- Figure 13: Attitudes towards later life planning, September 2020
Issues and Insights
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- More than a fifth are reassessing their later life plans due to COVID-19
- The perceptions of advice and guidance must be improved
- Care costs are still being sidelined for more immediate concerns
The Market – Key Takeaways
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- COVID-19 has been a crisis of later life health
- Longer retirements mean more complex needs
- Pensions Dashboard pushed back to 2023
Market Environment
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- Impact of COVID-19 on later life financial planning
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- Figure 14: Short-, medium- and long-term impact of COVID-19 on later life financial planning, December 2020
- COVID-19 has been a crisis of later life health
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- Figure 15: Number of deaths involving COVID-19 in England and Wales, by sex and age, registered 28 December 2019-30 October 2020
- More than half a million over-65s received long-term care last year
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- Figure 16: Number of clients aged 65+ accessing long-term support in England, 2018-19
- The average retirement will last more than two decades
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- Figure 17: Life expectancy of males and females at age 65, 2018-based period and cohort projections, 1981-2068
- Employment of over-65s has more than doubled in 20 years
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- Figure 18: Employment rate (three-month average), by age, July-September 1992-July-September 2020
- A quarter of over-50s have more than £100,000 in savings and investments
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- Figure 19: Value of savings and investments, consumers aged 50+, November 2020
Regulatory and Legislative Changes
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- Over-70s have faced the strictest COVID-19 guidance
- COVID-19 has brought the viability of the triple lock into question
- Pension freedoms age to rise to 57
- Pensions Dashboard pushed back to 2023
- CMA report finds concerns but stops short of major funerals reform…
- …while the FCA has highlighted equity release advice problems
- MaPS to launch post-COVID ‘later-life checklist’
Companies and Brands – Key Takeaways
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- A rise in gifting as a driver for equity release
- COVID-19 has pushed providers to innovate in digital channels
- Advertising in the pandemic has raised challenges over tone
Competitive Strategies
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- Equity release trends move towards debt repayment and gifting…
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- Figure 20: Uses of equity release based on value of plans taken out, Q1 2020-Q3 2020
- …as new plans have come to market at a rapid pace
- Royal London and LV= both launch new products as merger talks continue
- Innovations in digital applications and product changes
- Educating advisers, as well as consumers, is key
- free2 launches unsecured loan product for over-55s
- Funeral firms see COVID-19 incomes boost
Advertising and Marketing Activity
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- A sharp fall in advertising expenditure
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- Figure 21: Total above-the line, online display and direct mail advertising expenditure on later life planning products, 2015/16-2019/20
- Sunlife accounted for a quarter of adspend in the last year
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- Figure 22: Top 15 advertisers of above-the line, online display and direct mail advertising expenditure on later life planning products, 2017/18-2019/20
- Nielsen Ad Intel coverage
The Consumer – Key Takeaways
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- More than a fifth have reassessed later life plans due to COVID-19
- Half of over-50s have made later life financial plans
- Financial advice struggles for mainstream relevance
- Half of over-50s have no clue what income they will need in retirement
Impact of COVID-19 on Consumer Behaviour
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- Over-55s have the greatest concerns about exposure to COVID-19
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- Figure 23: People’s level of concern about the risk of being exposed to COVID-19, by age, 10-19 November 2020
- COVID-19 has had little impact on older groups’ financial wellbeing
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- Figure 24: Current financial wellbeing, by age, February 2020 vs November 2020
- Half of over-65s have been untouched financially by the outbreak…
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- Figure 25: How consumers have been affected or changed their behaviour as a result of the outbreak, by age, 10-19 November
- …and financial confidence has grown
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- Figure 26: Financial confidence for the coming year, by age, February 2020 vs November 2020
Consideration of Later Life Financial Plans
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- Half of over-50s have made later life financial plans
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- Figure 27: Consideration of later life financial plans, September 2020
- Housing stability is a boost to prioritising later life finances
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- Figure 28: Consideration of later life financial plans, by housing situation, September 2020
Sources of Information Used
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- Friends and family are the top choice for discussing plans
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- Figure 29: Sources of information consulted in relation to later life financial plans, September 2020
- Pensions are the key point of contact
- A third have spoken to an adviser, but further penetration will be difficult
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- Figure 30: Plans to speak to a financial adviser about later life finances in the future, September 2020
Barriers to Consulting a Financial Adviser
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- Two thirds don’t think they need an adviser
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- Figure 31: Barriers to consulting a financial adviser about later life financial needs, September 2020
- A third of undecided advice users think it is unaffordable
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- Figure 32: Barriers to consulting a financial adviser about later life financial needs, by plans to speak to a financial adviser about later life finances in the future, September 2020
Expectations of Later Life Income Requirements
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- Half of over-50s have no clue what income they will need in retirement
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- Figure 33: Percentage of current income expected to be needed for a comfortable lifestyle in retirement, September 2020
- Expected needs increase as retirement nears
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- Figure 34: Average percentage of current income expected to be needed for a comfortable lifestyle in retirement, by age, September 2020
Later Life Financial Priorities
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- Securing later life income is the top priority
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- Figure 35: Later life financial priorities, September 2020
- Death and incapacity become bigger considerations as people age…
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- Figure 36: Later life financial priorities, by age, September 2020
- …but long-term care remains a minority concern
- Wills, care and Power of Attorney are key prompts to making plans
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- Figure 37: Later life financial priorities, by consideration of later life financial plans, September 2020
Trust in Others to Handle Later Life Finances
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- Financial decisions are most likely to be kept in the family
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- Figure 38: Trust in other people to handle financial affairs in later life, September 2020
Attitudes towards Later Life Planning
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- More than a fifth have reassessed later life plans due to COVID-19
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- Figure 39: Attitudes towards later life planning, September 2020
- Maintaining independent living is a universal priority
- A mixed view on later life…
- …and an understanding that retirement is not a single lifestage
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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