The role of financial advice in boosting your employees wellbeing in retirement

Long-term planning provides financial security, but the benefits aren’t merely monetary. For your employees, knowing that they have the chance to live their dream retirement lifestyle – and maybe help out the ones they love too – can provide an enormous sense of wellbeing. When this wellbeing spills over into other aspects of their 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 people’s lives after work.

Concentrating on retirement planning now could mean your employees enjoying their happiness halo in the future. Here’s how financial advice could help boost your employees’ wellbeing in retirement.

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 employee’s retirement. 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 employees’ financial plans are aligned with their goals, based on the lifestyle they aspire to live and the type of retirement they expect. They might want to spend more time with family, say, or go travelling the world.

The ideal retirement is individual to each employee and retirement plans need to be too. It begins with the building blocks for financial wellbeing but includes a focus on their emotional health too.

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

1. Income – A long-term plan identifies goals and then helps your employees to budget toward those goals with the income they have. It’s a balancing act of paying their future self while living the life they want in the present.
2. A contingency – The unexpected can strike at any time and that’s why your employees need a 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 their future lifestyle. The earlier your employees start saving the better.

We know that financial stability is tied to financial, and by extension, overall wellbeing. That means that your employees’ plans need to consider their future emotional wellbeing too.

That’s why their plans might focus on non-financial aspects of their future life, helping them to think about:

• What makes them truly happy?
• How do loved ones fit into their plans?
• What is their ultimate goal?

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

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, get in touch today.

Please note

This article is for general information only and does not constitute financial 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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