Most people think that their UK State Pensions will be sufficient to tide them through in their retirement years. Quite simply, this is not true. Very few people can live comfortably just from their pension and in fact the pensioners of tomorrow may well be worse off than their equivalents in the 1980’s.
Introduced in 1908, the UK State Pension at which time was a means tested pension that was paid without recipients ever having had to pay into the scheme. It needed, an still needs a constant supply of tax payers to fund the scheme.
The Socialist government, just after the war introduced National Insurance Contributions and the idea was that everybody would pay National Insurance Contributions and then everyone would be able to draw a basic state pension which would provide enough money for a reasonably comfortable standard of living during their retirement years.
The UK Basic State Pension has risen from around 23 a week in 1979 to 97.65 today, and from 152.30 to 156.15 for those who are married. In the meantime, the average size of a private pension fund is just over 24,000 although just under two thirds of annuity purchases are for less that 20,000.
On those amounts, a non smoking male aged 65 can expect to receive an approximate income of 1,600 a year, and plus a state pension this would amount to just over 6,000 per year. This is quite clearly not sufficient to attain the degree of comfort in retirement that most would like to enjoy.
Regrettably, the idea of retiring at a set age for most of us is a thing of the past. We will only be able to retire when we can afford to do so as we will not be able to afford the standard of lifestyle to which we have become accustomed unless we aree happy to live on substantially less than we are used to.
However, all is not lost, by taking control and planning our pensions and retirement, from the earliest possible age, we can invest for our future rather than leaving it to chance. Making the decision to invest for the future at the start of our working lives, will pay dividends at the end of our working lives, which, after all is the time when we deserve to benefit from the fruits of our labours.
Discover more about retirement planning and investment management by visiting Heartwood Wealth Management.