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Only 38% of retirees believe they are spending the right amount, Wealthtime finds

Nearly a quarter (24%) said they spent less than they could comfortably afford, while 24% felt they were using their retirement assets too quickly.

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Only 38% of retirees believe they are spending the right amount, Wealthtime finds
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Only 38% of retirees believe they were spending the right amount in retirement, research from Wealthtime found.

The Permission to Spend report surveyed 1,000 UK retirees with at least £100,000 in investable assets, more than one retirement, investment or secondary property holding, and access to assets that could support their spending.

Nearly a quarter (24%) said they spent less than they could comfortably afford, while 24% felt they were using their retirement assets too quickly.

11% did not know whether their spending was sustainable.

The research found that 38% had a fairly precise idea of how much they could safely spend each year, while 26% knew a broad range.

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The remaining 36% had only a rough idea or no figure.

Retirees receiving financial advice were almost three times more likely to have a set annual spending figure than those without advice, at 71% compared with 24%.

Among those with a figure, 46% spent within their target range, while 37% overspent and 17% underspent.

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Wealthtime’s Spending Confidence Index recorded an average score of 54 out of 100.

Retirees with a written lifetime cashflow plan scored 65, compared with 49 for those without one.

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Among advised retirees, 50% said the confidence gained after a review faded within six months. 

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This included 27% who said it faded within three months.

When advisers told clients they could afford to spend more, 52% increased their spending and maintained it. 

27% increased it temporarily, while 21% made no change.

The research also found that 44% had postponed, reduced or cancelled something they could afford. 

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57% continued to save or invest while putting off an experience they wanted.

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.”

Milner added: “The value of advice does not end when the plan is agreed. 

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“Clients need to trust that it will work long after the review meeting has finished, but our research shows that confidence can fade within months. 

“The FCA is reviewing how ongoing advice should be delivered, including whether there is a need to move away from calendar-driven reviews, towards a model based on client need.”

He said: “We support giving advisers greater flexibility, allowing for more natural opportunities to check in with clients and helping to maintain confidence throughout the relationship.”

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