Canada Life has highlighted two ‘retirement journeys’ that are increasing dramatically among consumers and will the insurer says will reshape the market for advisers over the next 15 years.
This comes as the number of over 60s is expected to grow by a third, to 20.9m people by 2035.
The analysis, conducted by forecasting agency Trajectory Partnerships, found that retirement experiences are fragmenting, having been impacted by changes in how we spend our time, accumulate and spend wealth, the rise in individualism and the declining relevance of social norms.
The two retirement journeys which will grow the most in size over the next 15 years are:
Complex Families, Complex Finances – this group of retirees currently account for 32% of the over 60s market but is expected to be the largest group by 2035. These retirees’ family situation complicates their financial needs and planning. They are possibly on their second marriage and taking care of both their children and their parents’ financial needs.
Late Financial Bloomers – are characterised by achieving financial stability later in life. People in this group are likely to have got married, bought their first property and had children later in life, meaning they have less time to accumulate wealth. Currently they make up just 6% of the market but are expected to grow significantly over time.
Canada Life says that currently the majority of advisers’ business models cater to retirees that are Financially Mature and Stress Free – those with strong financial foundations due to good fortune in their family and working lives. However, this group makes up just 21% of the market today and is expected to decrease as a proportion of the total market over the next 15 years.
Sean Christian, managing director, wealth management division, Canada Life UK, said: “With those over 60 set to grow exponentially in the next 15 years there is an obvious opportunity for advisers. However, these new retirement journeys show us that the opportunity is fragmenting and focused in new areas.
“Societal changes have, and will continue to have an impact on the way we live in retirement, changing both the lifestyles and advice needs of clients. Unless the industry shifts its focus to support the clients that need them, we will collectively miss out on the opportunity to enable these people to have better financial futures.”
The other retirement journeys that the analysis identified are:
Healthy But Not Wealthy (18% of today’s market) – retirees on this journey stay healthy and active later into life, despite not having a huge amount of wealth. In some instances their healthy behaviours may be economically necessitated.
Unhealthy And Not Wealthy (23% of today’s market) – these retirees are left behind in the retirement revolution. They suffer from poor health and finances and the connection between the two makes it difficult to break the cycle.
Christian added: “It’s essential for us to lead positive change in the industry by thinking about future generations today. At Canada Life we’re entering an ambitious growth period and partnering with advisers to create the financially secure retirements of the future is a big part of our vision.
‘It’s no secret that ‘retirement’ will mean something very different in 20 years’ time and by working alongside advisers now to support them in future-proofing their businesses, we will all be ready to support the clients of today and tomorrow.”