What is the value of financial advice when it comes to your retirement?

Most people know good advice can be helpful, but with household budgets under pressure from the soaring cost of living, it can be a tough ask to shell out your hard-earned dollars on advice.

In the long run, however, not getting professional help can cost you more than you spend on it.

That’s particularly the case when it comes to planning your retirement, with research regularly showing real, measurable benefits from talking to an expert – both in terms of how you manage your retirement savings and your emotional wellbeing.

Anxiety about retirement

New research shows millions of Aussies are fearful they will not have enough savings for their retirement, while many pre-retirees feel they have left their retirement planning too late.

The 2022 Financial Wellness research by AMP found almost half of Australian workers don’t know how much they will have or need at retirement and two in three people aged over 65 are concerned about having too much debt. Against a backdrop of rising inflation and volatile investment markets, half the general population aged 50 to 59 are concerned higher living costs will affect their retirement lifestyle. 

According to AMP, this anxiety is heightened by a lack of understanding of their finances and Australia’s complex retirement income system. Making decisions about how to combine and manage your retirement plans, savings, housing needs and future expenditure is complex and most of us need someone to provide guidance through the maze.

As the report by Challenger and National Seniors Australia (NSA), The Evolution of Retirement Income: A 2022 Snapshot noted: “Retirees and pre-retirees urgently need better access to financial advice and user-friendly tools that account for the complexity of intersections between the retirement income system and people’s housing, health, age care and employment circumstances”.

Who gets financial advice about retirement?

When you’re busy working, retirement dreams might be a pleasant escape, but it seems few people actually create a plan to get there or think much about how they will manage their finances in retirement.

As the NSA/Challenger report noted, “most retirees do not seek financial advice, despite or perhaps because of the complex nature of retirement finances and the systems that support them”.

Anxiety about seeking financial advice can be due to concern about sharing personal information, feeling judged for having a lower income or for poor record-keeping. Concern about having a lack of financial knowledge or feeling overwhelmed by financial jargon can also be an issue.

A 2022 Transforming Financial ‘Advice’ Report by global research firm Core Data found retirement income planning was the key financial matter in the lives of 47% of Australians aged 60 to 69, followed by managing super issues (39%).

Within this age group, however, only 25% received financial advice from an adviser, with 19% receiving financial advice from a super fund. The figures for those aged 70 and over were similar, with only 28% receiving financial advice from an adviser.

Interestingly, only 58% of those aged 60 to 69 felt relaxed and in control when it comes to making decisions about money and financial affairs.

Your finances: How much can advice help?

When it comes to your retirement finances, several research studies have investigated whether there are measurable benefits from getting professional advice from a financial planner.