According to research by one of the world’s leading insurers, Zurich, 79% of retirees using pension freedoms to manage their retirement savings are facing a potential ‘later-life financial crisis’. The reason being that they have not yet set up a lasting power of attorney (LPA).
Over 345,000 retirees who use income drawdown to fund their retirement have not yet given a family member or friend the legal authority to make decisions on their behalf, should they suddenly fall ill or lose mental capacity.
This financial planning flaw could prevent an individual trusted by the retiree from immediately stepping in to help them manage their affairs in the event that they can no longer make their own decisions. Without an LPA in place, even a next-of-kin would be forced to apply to the courts to take charge of a relative’s finances.
Zurich has gone on to say that the findings highlight the scale of an issue that has arisen since the government abandoned rules requiring people to buy an annuity at retirement. Twice as many people are now choosing drawdown over annuities, giving them the responsibility of managing their income in their retirement years. If this gap continues to widen, the provider estimated it could leave 1.7 million retirees at risk by 2025.
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Zurich savings expert, Alistair Wilson, has said:
“With more and more people moving into drawdown, this is creating a ticking time bomb that could leave thousands of people facing a potential later-life financial crisis.
“It is vital that people plan for a time when managing their pension might become hard, or even impossible, and speaking to a financial adviser is one of the best ways to do this.”
With all this in mind, registering an LPA is now more important than ever. From our offices in Preston, Lancashire, we can assess your financial circumstances and work with you to structure your assets efficiently and identify the most appropriate way for you to achieve your financial goals.
For specialist financial advice in later life, contact Springfield Financial Services on 01772 729742 or complete our online contact form.