Smaller numbers of clients are looking to pass on cash to loved ones as clients come to terms with the challenges of sustaining retirement savings, according to new research.

A fifth (19%) of advisers surveyed for the Aegon research with Next Wealth into the retirement industry said their clients are looking to pass savings to loved ones. This is down from over a quarter (28%) the previous year.

According to Aegon, the trend points towards a greater understanding amongst clients of the challenges in sustaining retirement savings throughout retirement.

Over half (55%) of financial advisers said the majority of their clients are looking to create a sustainable lifetime income, the same proportion as the previous year (2018).

Only one in ten (10%) advisers said the majority of their clients prioritise using their retirement savings to withdraw ad hoc lump sums and just 1% of advisers said the majority of their clients want to completely withdraw their retirement savings over a short time frame. Both these responses remained consistent to the previous year.

Steven Cameron, pensions director at Aegon, said: “Since the pension freedoms, retirement savings have become more than just a means to provide a regular income for life. People now make use of the flexibilities to facilitate a gradual transition into retirement, transfer wealth to the next generations or take ad hoc lump sum withdrawals. The research shows creating a sustainable lifetime income is the priority for the majority of people but the ability to pass on savings to loved ones remains an objective for many.

“Decisions around when and how to take a retirement income are challenging and external influences feed heavily into the planning process. The government’s anticipated new plans for social care funding, for example, have significant implications for retirement aspirations as people need to know how much they are expected to pay themselves should they need care in later life. As we have seen over the last six months, a volatile stock market can also affect decisions, with individuals right to avoid taking large sums of money from their pension when fund values are depressed.

“In these times of great uncertainty, pension freedoms can give individuals huge flexibility over how to use their retirement savings, but this comes at significant risk and advisers are ideally placed to help individuals navigate their competing aspirations.”

The research by Aegon and Next Wealth was conducted with 227 financial advisers and supplemented with in-depth interviews with a panel of advisers in Q4 2019. Comparisons to the previous year are based on research with 267 financial advisers in 2018.