Affluent women lack confidence in retirement income plans

Affluent women approaching retirement are twice as likely as their male counterparts to be unsure of how to turn their pensions and investments into a regular retirement income, research from Rathbones has found.

It showed that 38 per cent of women with investable assets of £250,000 or more lacked confidence in their retirement income plans compared to 19 per cent of affluent men.

Rathbones described the findings as the ‘Great Decumulation Challenge’, when people transition from building wealth during their working life to spending it confidently in retirement.

Despite having high levels of wealth, many affluent investors were found to be uncertain about whether they can have the retirement they want.

Over a third (35 per cent) of affluent women did not believe their retirement income would be sufficient for them to live well, compared to 22 per cent of men.

Women were also less likely to believe they were on track to achieve the retirement they wanted and have a clear idea of how much income they will need in retirement.

Almost half (47 per cent) of affluent investors had not taken formal financial advice about retirement, which Rathbones said suggested many were navigating complex decisions on their own.

"The mental shift from spending years building a retirement nest egg to drawing on that wealth to generate a sustainable income that could last 20, 30 or even 40 years can feel like a leap of faith,” said Rathbones chief executive officer of wealth, Camilla Stowell.

“Individuals are increasingly responsible for making complex decisions around pension drawdown, investment risk, tax planning and longevity, increasingly without the certainty previous generations enjoyed from defined benefit pension schemes, which guaranteed an income.

"Our research suggests women are finding this transition particularly challenging.”

The study indicated that concerns about financial security often outweighed aspirations for the lifestyle retirement can provide, even among affluent households.

Half of affluent investors ranked ‘feeling financially secure’ in their top three retirement priorities, compared with 38 per cent who were prioritising maintaining their desired lifestyle.

"For many people, the fear of running out of money is greater than the desire to spend it, even among the affluent,” Stowell added.

“Our research shows that wealth alone does not always create confidence, and that anxiety is particularly pronounced among women.

"Retirement should be about enjoying the freedom that wealth can provide. Yet many people struggle to make the shift from accumulating wealth to using it confidently.

“Effective planning and advice can provide the reassurance needed to spend with confidence while maintaining long-term financial security."

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