“Do you really want to curtail the space you have to something that small, perhaps in an area that’s not where your friends or family are?”
But when it comes to other properties, Interactive Investor found that 71 per cent of those who are not retired and own a property other than their own home viewed these as pension income when they retire.
Partners and spouses may also come into the picture, although a survey from LV in June found eight in 10 non-retired, married people did not know what their spouse’s pensions were worth, and nearly half (47 per cent) had not spoken to their spouse about their retirement plans.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, emphasises the importance of a client’s marital or relationship status to retirement planning.
“Unless the partner is already financially secure, the likelihood is that the client would want to provide for them in some way should the worst happen.
“Decisions such as taking a single life annuity or not updating an expression of wish form on a pension could leave a spouse or partner in real financial difficulty. This is especially the case with cohabiting couples – there is no such thing as common law marriage and you could live with someone for many years and find you have no claim to any of their assets should they die. This is why it is important to consider any partners when developing a retirement plan.”
Claire Trott, divisional director of retirement and holistic planning at St James’s Place, also notes the importance of factoring in a partner’s income, but suggests caution.
“If they’re not married and then they split up, then you probably shouldn’t be factoring it in. Because they’re not married, they’ve got no claim on that money.
“If they are married then you’ve got pension sharing orders on divorce, which can make sure that the funds are split appropriately if something happens.”
Other contingencies that should be considered include poor investment performance, ill health and potential care requirements, says Sanderson at Brooks Macdonald.
“I think fundamentally it’s about having some adaptability, so that when we create a plan it is a relatively cautious one.
“What I tend to do with clients is present a secondary [plan], which will have slightly lower growth rates for things like property and investments. It will have higher inflation so that they can see the cost of goods, as they’ve experienced in the last 20 years, may look very different in the next 20 years."
Chloe Cheung is a features writer at FTAdviser
