Life expectancy & Pensions

Thursday, 10th November 2011 13:27 - by Resident IFA

We are living longer. The Office of National Statistics (ONS) recently published 2010 statistics appertaining to life expectancy in the UK. These showed that the average man who is now 65 years old can reasonably expect to live until age 83. Women can add almost 3 years (on average) to this when considering their life expectancy. This is all well and good, yet creates its own problems. If a person is able to retire at 65, they have to be confident that their income and assets will ‘see them out’. If this means for 18-21 years, that is quite a substantial period of time; equating to around half their working/adult life again. Add to this the crumbling state, or simple removal, of (even ‘Bronze-plated’!) workplace pension schemes, and this highlights how difficult it could be to make ends meet…or live the lifestyle you wish to with more time on your hands. The full rate of Basic State Pension (BSP) is payable if you have 30 qualifying years on your National Insurance Contributions (NICs) record. For a married couple, the maximum BSP is £8,494 per annum (£163 per week). If this is – as could quite possibly be for a sizeable part of the UK population – the main or largest element of a retired person’s income, the ‘golden’ retirement years could become ‘drab grey’ instead. This is where financial planning and modelling comes to the fore. To ensure that you are aware of what you currently have (or perhaps don’t have) in place, it can be good to seek the advice of an Independent Financial Adviser (IFA). They will help reprise the features of existing contracts you hold, and help look ahead to judge if you are likely to have the kind of retirement (income) you hope for. The well-known phrase ‘If you fail to plan, you plan to fail’ seems appropriate here. I would be surprised if an IFA would not give benefit to your pension planning. However, there are ‘DIY’ tools available for those who wish to see a model of their assets and incomes, and how they will fare into retirement (with expenditures and goals factored-in). Whatever way you do it, I’d urge you to do it sooner rather than later. You can stick your head in the sand, but you are ultimately best-placed to look after your own affairs…the State and Joe Bloggs are not likely to prioritise your ‘want’ of two holidays a year after age 65! Until next time…