This reveals the growing pensions income challenge faced by future pensioners, at a time when longevity is increasing more quickly than ever before.

Today’s over 55s, for example, will live for an average of 88 years, typically retiring at 63 years and 6 months.

With an average of 44 years in work and a retirement lasting 25 years, each year of retirement is funded by just under two years of work. This is a difficult imbalance, considering how little most people save for their retirement planning every year, Aviva said.

As longevity increases, what has been termed the pension incomes ‘timebomb’ will place an unsustainable pressure on the individual person’s income from pensions.

The need for independent pensions advice to consider a personal pension, or one of the many other pension types, has never been more clear.

Demographic trends also indicate that the situation is likely to worsen in future.

Not only will people setting out on their working lives today live for longer, they are likely to start working later.

Even those who are able, in the future, to enjoy an early retirement at 60, could be retired for almost as long as they are working. This means that each year of retirement would need to be funded by just over a year of work.

The largest single source of income for the over 55s today is the government’s basic state pension and associated benefits (24%) followed by company pensions (16%) and wages (13%). However, as the Government has indicated that it will be looking more towards self-funding of retirement, and many companies close their generous final salary pension schemes, this does not bode well for future generations.

The average UK household spends more per year on the lotto than on life insurance cover.

Only 41% of people in the UK have life insurance cover, while 68% of people play the lotto and gamble in various other ways. This means that while only 20m people in the UK have a life cover policy, some 34m gamble, according to Aviva.

The monthly average household spend on the lotto and on gambling is £13.80, while the cheapest life insurance cover can mean a life cover policy that costs just £5 a month.

Aviva claimed that, if most people believe they stand a better chance of winning the lotto than of benefiting from life insurance cover, they are sadly mistaken – and by a long way. Devoting cash to gambling, rather than to the best life cover, could be like ‘playing Russian Roulette with your loved ones’ security’.

While only 1 person in 14 million wins the lotto, 1 in 3 people die of cancer, and 1 in 5 people die of heart disease.

Aviva pointed out that we are much more likely to be killed by a shark (odds of 3.2m to 1) or be struck by lightning (258,000 to 1), than to land that elusive lotto windfall.

“People know that protecting themselves and their family is extremely important, but many people wrongly think it’s too expensive, and delay life insurance. People gamble in the hope they may win the lottery, but put off life insurance thinking it won’t happen to them, when it is one of the unfortunate guarantees in life,” said Louise Colley, head of protection at Aviva.

Would you like to learn more about life insurance cover? Make a life insurance enquiry or ring freephone 0800 678 5929 now.

The importance of client loyalty and the ongoing customer relationship were revealed in an Aviva / YouGov survey of 228 financial planning professionals, published this week.

Of those advisers surveyed, 85% said that word of mouth and referrals from satisfied clients were their best source of new business, and almost half (47%) said they also expected increasing revenues due to future work on a financial plan for existing clients.

The priorities for advisers in providing financial planning advice were good customer service (77%), competitive products (68%), rapid query and information turnaround (58%), and face to face contact.

“Putting the customer first has long been seen as the key to a profitable business, and our research shows that this is still the case. Financial advisers expect the majority of their new business to come through existing customers in the coming months, either directly or through referrals,” said Simon Badley, director of intermediary business at Aviva.

The key to success in offering financial advice was the ability of advisers to forge long-term relationships with clients, as well as the in depth knowledge gained in the course of financial planning for the client, their family and their business. The core value to customers was the comfort of knowing that the adviser was still around to take responsibility for financial advice given in the past, and to ensure that their financial planning advice remained relevant to the client’s needs.

The Aviva COTS (Cost of the Sibling) study found that with the cost of childcare for 2 children now almost £16,000 a year*, many spouses would be working ‘just to pay the childminder’ in the event of the death or loss of income of their partner. The only option would be to survive on state benefits, if no life insurance cover and critical illness insurance were in place.

For many 2-child families, the cost of childcare has already made it unattractive for both partners to remain at work, after the arrival of the second child. In Aviva’s study of 1,000 parents with 2 children, 4 in 10 families felt that continuing to work was an unworkable option and one which will be even less so, with the loss of Health in Pregnancy grants and other benefits in the June 2010 budget.

*Full-time nursery place for child under 2 typically £152 per week or £7,900 per year

Taking as an example a person disabled by a stroke, the costs of converting their home to deal with this tragic situation would require over £3,200 on day one. This is simply to facilitate basic functions such as access, mobility, and continued independence within the home. Additional costs for medical treatments and carers would follow later.

Costs of all items below are based on actual products currently available on the market.

A motorised wheelchair would be required straight away, to allow the person freedom to leave the home when they so desire. As of today (June 2010) a basic model would cost £455.

In order to negotiate a step in the garden path, 1 x 2ft foldable access ramp: £95.

In order to have access to the upper floor of the house: 1 x motorised stair lift: £895

Use of toilet: toilet frame with integrated designed seat: £87

Personal bathing: in order to lower and raise the disabled person into the bath: 1 x electric bath seat £581

For rest day and night: hand-controlled position-adjustable electric bed frame: £1,168

This gives a total of £3,281 for indispensable items that would be immediately necessary for independent, day to day living, following a stroke.

Critical illness insurance cover offers a tax-free lump sum payment when a person is struck down by a critical illness or health condition. Each policy has its own list of conditions covered and its own exclusions. Understanding the ‘small print’ is particularly important, as exclusions may have a direct effect on critical illness insurance claims.

This makes critical illness insurance a product best purchased with unbiased financial advice from an independent financial adviser. Many customers can achieve a saving by taking a combination of life and critical illness insurance as a ‘bundled’ product.

The retirement plans of UK workers reveal an over-optimistic view of what will be achievable with their actual pensions incomes, a new report reveals.

Over half of over 55s earning between £20k and £30k have saved less than £30k for their retirement, according to Aviva, which will give them a likely pension income from their personal pension or company pension of £165 per month, or just over £40 per week.

Despite this, 23% envisage global travel after retirement, and 43% see their lifestyle, on their pensions income, featuring ‘new opportunities and experiences’. In general, 23% are anticipating a retirement on their pensions income that they describe as ‘comfortable’.

The research shows a clear need for future retirees to take independent financial advice from a qualified pension planner, in order to have a realistic view of what they can expect from their pensions income.

Other aspirations which may be affected by the reality of their pension income include spending more time and money on hobbies, which is part of the pension planning of 63% of us, and 48% planning to spend more time with their loved ones and family, which may imply considerable expense on travel as well.

The post-war ‘babyboomer’ generation who are now in their 50s have generally experienced rising property prices, and lived in the golden era of final salary pension schemes, both of which can no longer be taken for granted. These may have given people exaggerated hopes for their pensions planning and lifestyle in retirement, according to Aviva.

“Unfortunately many may still struggle to fund the retirement lifestyles they desire,” said Clive Bolton, ‘at retirement’ director of Aviva.

“In the run up to retirement, people should think about how they want to spend their days, and in reality, how much this will cost. Regardless of what pension pots people have, turning them into a viable income is vital.”

Some of the ancillary benefits now included in life insurance cover and critical illness insurance can be a
considerable factor in deciding which policy is best for you.

For new parents, for example, Aviva is now offering free life cover of £10,000 to those who contact the company before their child is 6 months old. The free cover then runs until the baby’s first birthday.

Many of the larger insurers, including Aviva and Prudential, include cover for your children, when you take out a critical illness insurance policy. This provides your children with critical illness insurance free of charge until they turn 18. Around 2% of claims for critical illness relate to children, and policies generally include conditions often associated with the young, such as leukemia.

Staying with the area of criticial illness insurance, LV= offers critical illness and income protection customers
who make a claim some attractive options, once their claim is complete. Their Extra Care service offers customers oncology, cardiology or neurology care, as well as access to therapeutic, physio or counselling expertise.

Those who buy life insurance cover through Scottish Provident are also offered the Lifeline service, which offers access to experts giving life and health-related information relating to legal issues, employment, and counselling services.

Bright Grey offers its Helping Hand service, which give customers access to a personal nurse adviser. This advice is also available to your partner and children, even if you have divorced since taking out your life and critical illness insurance policy.

Aside from pure life and critical illness insurance, there is another useful option for parents contained in the income protection insurances by Royal Liver. A lump sum of four times your gross monthly income protection benefit (up to £25,000) is available to parents who want to give up work to care for a seriously ill child.

Insurance specialist LifeSearch, which highlighted these optional services, pointed out that ‘a good financial
adviser will be able to identify the most suitable policy for a client that many direct sellers just don’t have the expertise to do.’

“Money doesn’t buy happiness - money just buys off unhappiness.” The line, from the opening scene of Hitchcock’s ‘Psycho’, may be the closest the great man came to hinting that a financial plan can improve the quality of your life.

His words have now been echoed in the ‘Feel-Good Insight Study’, produced by Aviva with the help of leading psychologist Dr Malcolm Cross from City University London. The study concludes that working with financial planners to set up a goal-oriented financial plan can largely eliminate money worries, making you happier overall.

The study found that 68% of those with high self-esteem have a financial plan, and 62% have set themselves clear financial goals for the long term. Looking at people with low self-esteem, on the other hand, three-quarters have no financial plan for the long term. Due to this failure to take financial planning advice, 69% of those with low self-esteem are plagued by money worries on a daily basis.

Happiness tends to be linked more to a feeling of financial control, rather than to a level of wealth, Aviva found. More people earning over £50,000 have low self-esteem than high self-esteem, but 85% of those with high self-esteem also felt in control of their financial plan.

There was a clear correlation between happiness and taking financial planning advice, or online financial planning advice. Simple steps such as working with financial planners to work out a structured financial plan, or sort out writing a will, give a concrete sense of financial control which translates into happiness in real terms.

For those without a financial plan, the indicators are generally less positive in terms of personal contentment. While most people (86%)  worry about money at some point, 1 in 3 (34%) worry about their finances every day and 2% claimed they worry about money ‘every minute of the day’.

Half of all women (52%) feel overwhelmed by the amount of financial information they see, highlighting their need for financial planning advice or guidance from financial planners. Five per cent of UK adults ‘don’t have any understanding’ of financial products, Aviva said, which rises to 16% for those in the ‘low self-esteem’ group.

Nearly a third of people (30%) with a pension believe they need further financial planning advice, to put the right pension provision in place.

In terms of personal debt, a quarter (25%) of people with a credit card do not know how much they owe, and feel out of control of their debt, again indicating they would benefit greatly from financial planning advice and the creation of a well-built financial plan.

No matter how good your financial plan, however, a stay at the Bates Motel is not recommended.

While 47% of parents wish to persuade their children to save into personal or company pensions, a third (36%) would actually contribute cash as a ‘kickstart’ for their children’s pensions planning.

Hard lessons appear to have been learned from the property downturn as well, Aviva reveals. Three quarters (76%) of homeowner parents are now advising their children that property ownership alone is too risky as a pension planning strategy. Their pension advice is not to rely solely on property, but to supplement this with structured pension planning and pensions saving.

Over half of parents surveyed, again perhaps disillusioned with their fortunes as property owners, believed the UK is too obsessed with getting on to the property ladder.

Parents appear to be pushing their children towards taking pensions advice, with 88% declaring they are worried about their child’s financial futures. For 7 out of 10 parents, there is a fear that the Basic State Pension may no longer exist, by the time their children reach retirement.

Other parents worry that a lack of pension planning could mean that their children will have to work beyond retirement age (60%), be unable to afford to pay their bills when they stop working (45%), or suffer health problems as a result of working longer (29%).

Furthermore, 11% of parents stated that they are warning their children not to make the same mistakes they did, by becoming over-reliant on property values in their pensions planning.

Of those homeowners who admit to having put their pension planning on the back burner, and have not yet taken pensions advice or set up a pension, 40% claim the economic downturn has prompted them to think about pensions advice and investing into a pension.

Property expert Sofie Allsop, who worked with Aviva on analysing the research, said: “Bricks and mortar are a good investment, but the recession has served us with a painful wake-up call that property values can go down as well as up. Parents are right to urge kids to climb both the pensions ladder and the property ladder.”

Pension income for a typical couple in their 60s dipped under 6% recently, bringing pension annuity rates to their lowest level in 20 years. As a result, a 60+ couple retiring in June 2010 with pension savings of £100,000 would stand to receive just £5,860 today, down 3.6% in two months from the pension income of £6,080 they would have received if they had purchased their pensions annuity in April.

The underlying cause for the wholesale reduction of pensions annuity rates lies in the gilts market. As insurers derive their returns for annuity payments primarily from gilts, the recent slump in gilt yields  has had a disastrous knock-on effect on pensions annuity rates.

Using the Open Market Option (OMO)

The problem is exacerbated by a lack of awareness among retirees that they do not have to stick with their pension provider, when converting their pension pot into a pension income by purchasing their pensions annuity.

In 2009, 63% of people retiring (290,000 of them) stuck with their pension provider and failed to use their right to shop around, with the help of independent financial advice, for their pensions annuity. This right is known as their Open Market Option (OMO).

Those retiring with a pension pot of £5,000 or above can have their financial adviser do a competitive annuity quotation, a useful pensions planning tool which could increase pension income by up to 20%, and can add hundreds of pounds a year.

Are you retiring in the near future, and wishing to compare pensions annuities, to maximise your pension income? Make an annuity enquiry,  or freephone 0800 678 5929 now.