Why aren’t we making pensions a priority?
Pets, Porsches and politics are pushing pension planning further down the agenda.
10TH SEPTEMBER 2018
Where do your priorities lie?
For most, the matters at hand are often the most pressing, be it saving for a new (or first) home, providing for family or purchasing more luxury lifestyle items.
Pension planning is not as immediate as property or as sexy as a new motor, but it could be the difference between prosperity and poverty in retirement. And it’s being overlooked.
Much has been made in recent weeks of the pension millionaires of the current generation, who benefited from defined benefit schemes and higher annuity rates to enjoy a comfortable retirement.
Leading investment firm Hargreaves Lansdown set out to determine just how much today’s younger workers would need if they were to accrue a seven-figure income by the end of their working life.
HL analysed the investments of over a thousand ‘pension millionaires’ – and determined that, based on projected growth, a 22-year-old investing £500 a month could look to bank £1m by the time they turned 68.
Perhaps understandably, putting that amount into a pension is not high on the list of objectives for 22-year-olds, particularly those fresh out of university or enjoying the fruits of their first labour.
Research from the Association of British Insurers has shown that millennials would rather have a pet than a pension. One-quarter of those surveyed wanted a cat or a dog, compared to one-fifth of respondents who showed a keenness to put aside funds.
It is not only the young who are naïve when it comes to pension decisions. At the other end of the scale, those approaching retirement can be just as blasé in terms of their choices and priorities.
Legal & General recently determined that over-55s spend more time choosing a new car than they do on pension arrangements.
According to the report, 32% of those surveyed would spend less than a week determining which course of action to take with their retirement funds, while 40% would take more than seven days to decide on their next set of wheels.
In short, the next generation to retire would rather spend more time at a dealership than around the desk. Hardly surprising, but worrying nonetheless.
In the current climate, a different strand of politics has taken precedence over pension planning.
Brexit, Chequers and No Deal are the words on everyone’s lips, shifting the discourse away from other financial matters. Philip Hammond’s Autumn Budget is due at the end of October, but the only mention of pensions has been in relation to ex-pats and their pots.
Only last month, the former Governor of the Bank of England, Mervyn King, described the quietly growing pension problem as one of the country’s largest economic issues.
“We save too little, we haven’t worked out how to save for retirement,” King told the BBC in September. “Is that being discussed at present in an open way? No, because the political debate has been completely taken up by Brexit.”
“We have always said that retirement planning can never start soon enough,” says Chris Breward, Managing Director at Wealth of Advice. “That goes for those just starting on their working journey, right through to those approaching retirement. Younger generations should start saving when they can, while older generations should be contemplating their options well in advance.”
Wealth of Advice provides tailored retirement planning services, helping you get precisely what you want out of your pension.
Don’t delay, get in touch today.
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