The role of financial advice in boosting your wellbeing in retirement

Long-term planning provides financial security but the benefits aren’t merely monetary. Knowing that you have the chance to live your dream retirement lifestyle – and maybe help out the ones you love too – can provide an enormous sense of wellbeing. When this wellbeing spills over into other aspects of your life, it is known as the “happiness halo”.

A recent report, published in Professional Adviser, has looked at the connection between financial advice and overall wellbeing, including happiness and quality of life, in retirement. Its findings suggest – perhaps unsurprisingly – that financial security can provide a general wellbeing boost during your life after work.

Concentrating on your retirement planning now could mean enjoying your happiness halo in the future. Here’s how.

The report looked at how much income retirees really need to be happy

The Danish think tank, the Happiness Research Institute, partnered with Legal & General to explore the link between financial security and overall happiness in retirement. Partly, the research looked to answer the question: Can money buy happiness?

It concluded that an income of around £1,700 a month (around £20,400 a year once the State Pension is factored in) is enough to make UK retirees happy. L&G suggests that this amount could be provided from a pension pot of just £221,800.

The report also suggests, though, that higher incomes coincide with greater degrees of happiness (albeit with a plateau, which begins from an income of around £2,000 a month).

Most importantly, the report goes on to look at the knock-on effect of financial wellbeing in retirement on other aspects of retirees’ lives.

There’s a link between financial stability, overall wellbeing, and the happiness halo

Financial security can lead to increased economic wellbeing but this is only the start. The spreading effect of this wellbeing, or the happiness halo, can reach into all aspects of your retired life. The happiest retirees reported greater satisfaction than their less happy counterparts in their:

• Day-to-day routines (80% compared to 28%)
• Free time (66% compared to 25%)
• Relationships with family and friends (70% compared to 36%)
• Social lives (74% compared to 23%)

• Likelihood of reporting severe loneliness (4% versus 18%).

More than a third (34%) of retirees responded to the Happiness Research Institute research by confirming that money worries hindered their ability to socialise, with an obvious impact on potential loneliness and emotional wellbeing.

The importance of financial wellbeing can’t be underestimated and it starts with a robust and considered long-term plan.

Financial advice and the building blocks of financial wellbeing

Your financial plan is aligned with your goals, based on the lifestyle you aspire to live and the type of retirement you expect. You might want to spend more time with family, say, or go travelling the world.

Your ideal retirement is individual to you and your retirement plan needs to be too. It begins with the building blocks for financial wellbeing but includes a focus on your emotional health too.

Working with an adviser can help you focus on some key areas of your finances, like:

1. Income – A long-term plan identifies your goal and then helps with your budget toward that goal with the income you have. It’s a balancing act of paying your future self while living the life you want in the present.
2. A contingency – The unexpected can strike at any time and that’s why you need backup, in the form of a rainy day or emergency fund. Protection to cover loss of income or illness is also important here.
3. Savings and investments – Long-term savings and investments, through tax wrappers like a pension or ISA, are key ways to help fund your future lifestyle. The earlier you start saving the better.

We know that your financial stability is tied to your financial, and by extension, your overall wellbeing. That means that your plan needs to consider your future emotional wellbeing too.

That’s why your plan will focus on non-financial aspects of your future life, helping you to think about:

• What makes you truly happy?
• How do loved ones fit into your plans?

• What is your ultimate goal?

Having these conversations as early as possible helps to ensure you have a plan in place that is right for you, and a clear path to achieving your goals. An ongoing relationship with a finance professional can give you peace of mind that your plans remain on track, giving you financial and emotional wellbeing now, safe in the knowledge that your future is secure.

Get in touch

To learn more about how our financial planners can help you stay on track to your long-term retirement goals, whatever life throws at you, email us at advise-me@fosterdenovo.com or call us on 0330 332 7866.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

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Sources: https://www.professionaladviser.com/opinion/4377950/advisers-play-role-boosting-wellbeing-retirement