You want us to be rich in re­tire­ment? We need to talk

The Scotsman - - Farming - pa­trick connolly

MANY cou­ples in Scot­land are in dan­ger of putting their fi­nan­cial fu­tures at risk by not talk­ing to each other about plan­ning for their re­tire­ment.

Re­search re­leased this week by Pru­den­tial shows that more than one in four cou­ples in Scot­land over the age of 40 have never dis­cussed re­tire­ment plan­ning and nearly two thirds have not done so in the past five years.

These fig­ures sug­gest that not enough peo­ple un­der­stand the im­por­tance of sav­ing for their fu­ture. Many peo­ple still be­lieve that ei­ther the state or their em­ployer’s pen­sion will look af­ter them in re­tire­ment and so there is lit­tle need to dis­cuss this with their part­ner.

How­ever, de­spite pledges from politi­cians of in­creases to

“Peo­ple can­not rely on the state for a com­fort­able stan­dard of liv­ing”

the ba­sic state pen­sion, the re­al­ity is that peo­ple can no longer rely on the state to give them a com­fort­able stan­dard of liv­ing in re­tire­ment. This will only get worse as the pop­u­la­tion con­tin­ues to age.

Most peo­ple will also not be able to rely on their em­ployer. Few peo­ple now spend all their ca­reer with one em­ployer and more em­ploy­ers are clos­ing down fi­nal salary pen­sion schemes; pen­sions that pro­vide the best ben­e­fits to em­ploy­ees. It is there­fore im­por­tant that peo­ple re­alise they need to pro­vide for them­selves.

How­ever, many peo­ple have a neg­a­tive per­cep­tion of pen­sions and the rules re­lat­ing to them can be con­fus­ing. The Pru­den­tial re­search found that more than one in three cou­ples in Scot­land don’t have de­tailed knowl­edge of their part­ner’s pen­sions and in­vest­ments, while more than one in ten said they were not re­ally in­ter­ested.

This is not just the re­sult of poor com­mu­ni­ca­tion among cou­ples but also be­cause the fi­nan­cial ser­vices in­dus­try has not ef­fec­tively en­gaged with peo­ple; be­cause bad news sto­ries are the ones more of­ten in the press head­lines; and be­cause suc­ces­sive gov­ern­ments have con­tin­u­ally tin­kered with pen­sion and tax rules.

It is es­ti­mated that to get a de­cent stan­dard of liv­ing in re­tire­ment the av­er­age worker should be sav­ing about 10 per cent of their pre-tax salary if they start sav­ing in their twen­ties or early thir­ties. How­ever, those who de­lay start­ing their pen­sion sav­ings un­til they are in their for­ties need to put aside more than one-third of their salary to be sure of a com­fort­able re­tire­ment, a fig­ure that will be be­yond the scope of the vast ma­jor­ity of peo­ple.

One way of look­ing at re­tire­ment plan­ning is to view it as a jour­ney. The first ques­tion you need to ask is: where are you now? This will in­volve un­der­stand­ing any ex­ist­ing pen­sions, in­vest­ments or sav­ings you have and con­sid­er­ing what dis­pos­able in­come is avail­able to make fur­ther sav­ings.

The sec­ond ques­tion is: where do you want to go? Cou­ples may have dif­fer­ent views over when they want to re­tire and how much in­come they will need.

The fi­nal ques­tion is: how do you get from where you are to where you want to go? An­swer­ing this ques­tion may re­veal that re­tire­ment plans are not on track. If that is the case then you may need to re­tire later than you had hoped or pre­pare to live on less in re­tire­ment than you were ex­pect­ing.

The Pru­den­tial re­search is an­other pen­sions wake-up call.

Pa­trick Connolly is head of com­mu­ni­ca­tions at AWD Chase de Vere.

Rental prop­erty is much in de­mand, but in short sup­ply

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.