How financial wellbeing gives your employees stability in retirement

How financial wellbeing gives your employees stability in retirement…with room for fun too.

 

Reports suggest that achieving “financial stability” is the main aim for a vast majority of UK retirees.

Having sufficient money to pay bills each month is important, but for your employees, it can mean more than this.

Stability is about living the desired lifestyle they choose while having enough disposable cash to do the things that mean the most to them. That might be spending time with family or jetting off around the world.

A robust retirement plan aligned to your employee’s goals will allow them to do both, looking after their finances and their wellbeing throughout retirement.

Keep reading to find out how.

Your employee’s financial wellbeing means thinking not only about their money but about their physical and mental health too.

A recent survey from Legal and General (L&G) has looked at Brits’ ultimate retirement dreams. It found that 94% of UK savers see lifelong financial security as their most important concern.

According to the report, retirement plans also need to factor in:

• Quality time spent with family (90%)
• The possible need for later-life care (81%)

• Covering major family events, like weddings (73%).

These key requirements are all attainable with good preparation and a focus on goals.

Knowing that they can comfortably live the retirement lifestyle they choose, that they can withstand a financial shock and their family will be looked after, gives your employees peace of mind and a sense of control over their future.

It might also allow them the freedom to let their hair down. It’s important for your employees to remember that “fun” can also be an integral part of their plans.

As well as fuelling their financial health, a robust long-term plan should aim to look after their physical and mental health too. Combined, we think of this as “financial wellbeing”.

Retirement means having more time on their hands and greater opportunities to do the things they love. These might include:

• Travelling and going on holiday (52%)
• Enjoying their favourite hobbies (38%)

• Completing house renovations (28%).

A good plan will allow them to do these things, looking after their wellbeing while they remain confident that they are financially secure.

5 important steps to achieving financial wellbeing

 

1. Regular income

Whether in the accumulation phase, during their career, or once they’re retired, a regular income is key to financial wellbeing.

A guaranteed and stable income allows them to budget for themselves and their family, now and in the future. It also gives them peace of mind and a sense of control.

Adding irregular income options in retirement, whether from a side hustle during their working life or via Pension Freedoms, can improve flexibility but they will likely find that a solid foundation is key.

 

2. Long-term savings and investments

The financial security that 94% of UK savers are looking for in retirement begins with a solid long-term plan.

Balancing savings and investments, and risk and reward, should help your employees to build a plan for their future dream lifestyle, while still living the life they want now.

This requires careful budgeting, but paying their future self is key. Prioritising “future them” by contributing to their pension or protection products, and maintaining an emergency savings fund as soon as they get paid each month. Then, budget with what remains, ensuring they can still meet fixed financial obligations like a mortgage and household bills.

 

3. Financial resilience to withstand financial shocks

The simplest way to build financial resilience is for your employees to make sure they have an emergency fund in place. Between three and six months household expenditure, put aside, and kept in an easy access account could make all the difference if the unexpected strikes.

Keeping track of it, especially in a high-inflation climate when cash savings are effectively losing value in real terms. This should help your employees to hold just the right amount but not too much.

Also making sure they have sufficient protection in place, such as to protect them against a sudden job loss or a potential break in income following an accident.

Knowing that their family will be looked after should the worst happen to them is key to feeling a sense of control over the uncontrollable.

 

4. Favour experiences over possessions

Back in November 2022, a Royal London report found that 72% of those approaching or in retirement would rather spend their money on experiences than possessions.

The over-55s would rather go on holiday, enjoy days out, or indulge their hobbies rather than buy property, cars, and works of art.

Creating memories and experiencing new things could provide a huge boost to the mental wellbeing of your employees.

When they sit down to think about their long-term plan, they might want to consider what makes them happy now and what is likely to make them happy in the future.

 

5. Ignore the noise and focus on their long-term plans

With global news stories available straight to our devices 24 hours a day, it can be all too easy to doom scroll through bad news, concentrating only on the negatives.

In terms of long-term financial plans, these short-term hits of headline-grabbing gloom can lead to emotional and knee-jerk reactions.

These are bad news for long-term plans.

It’s important for your employees to stay focused on their ultimate retirement goals. If their dream retirement hasn’t changed, the plan to achieve it doesn’t need to change either.

 

Get in touch

As an employer, ongoing financial education can be beneficial, if you’d like to learn more about how you can support your employees with their financial wellbeing, we can help.

Email info@second-sight.com or call us on 0330 332 7143.

 

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.