If a client leaves an adviser meeting with a confident feeling about their financial future, they probably feel that way because of a job well done.
No doubt they have a fully considered plan, which has allowed for different scenarios and has the appropriate safety nets in place.
The plan will be revisited and adjusted accordingly as circumstances change, but generally the client will feel comfortable with the path they are on.
They will have healthy saving habits for rainy day funds. They will be making regular meaningful contributions to their pension. They will have their other savings and investment vehicles and know everything is being handled in the most tax-efficient way.
They will have discussed their retirement aspirations, considered how they want to support family members now and later and have factored in the transfer of wealth.
Most importantly they will trust their adviser, understand the true value of the relationship and appreciate the peace of mind it brings.
So, perhaps quite rightly, they will feel confident about their retirement prospects while still being able to enjoy life today.
High retirement confidence is a good thing if there’s a valid reason. I’m sure every adviser wants all of their clients to have that feeling.
But unfounded confidence is a different thing entirely. This can have catastrophic effects on long-term retirement income and impact an individual’s financial and overall wellbeing.
If someone is relying on their own gut feeling as to whether they will be able to achieve the type of retirement they hope for, they could be in for a rather nasty surprise.
Confidence needs to be realistic. With there being more responsibility on individuals to save for their later life, it’s not something they can afford to get horribly wrong.
How much we need isn’t an exact science. Many people might not even be able to hazard a guess. Or could be way off the mark if they attempt one.
It’s the same when it comes to how long we might live. If we do provide an answer, we are likely to underestimate our life expectancy. And yet, there is a real possibility many of us will join the centenarian club.
The problem is there are so many unknowns. It’s hard to picture what our future will look like. For younger people retirement might feel like such a long way off that they avoid giving it the attention it deserves now.
Advisers and those supporting them know that as a society we could do with getting more people to save more.
Ideally, they should have started yesterday, but if that did not happen then we need to fall back on the 'there’s no time like the present' motto.
