Why you should be worried about your retirement

By Brian Butcher Dip PFS

The problem.....

There may not be enough workers to pay pensions in the future.....

The baby boomers are retiring – collecting their state pensions from around now. They didn’t have as many children as the previous generation so the proportion of taxpayers to pensioners is falling rapidly.

In 1941 there were 5.6 workers for each pensioner, in 2000 there were about 4 workers per pensioner and by 2040 there will be just 2.6

Final Salary Pension Schemes in Massive Decline.....

Employers are switching from final salary pensions where the required employer contributions were around 20% to money purchase schemes where the average contribution is only 10%

The governments new personal accounts scheme or ‘NEST’ will require only 3% employer contributions

The problem .....Pension funds have struggled over the last 10 years with 3 major stock market corrections

For the 10 years up to May 2009 equity returns averaged just 1.3% a year – lower than cash and bonds

People are living longer

When the state pension was created the average age of death for a man was 67 and now it is 84 (a recent Paternoster study said that half of today’s 30 year olds could live to age 100)

The state pension age is gradually being increased

Between 2010 and 2020 women's retirement ages are increasing to 65.Between 2024 and 2026, retirement ages for men and women are increasing to 66.Between 2034 and 2036, retirement ages for men and women are increasing to 67.Between 2044 and 2046, retirement ages for men and women are increasing to 68.

Statistics collated from Dr Ros Altmanns special retirement report May 2009

So how are the general public reacting to this ?.....

A recent retirement research of 1425 people in the UK between 30 and 65 in March 2009 by Aegon SE found the following results –

•Only 37% of people ‘thought’ they were saving enough to provide a lifestyle they would be comfortable with in retirement

•Over 35% of people felt they could realistically retire before age 65

• 2/3rds of people admit they are not saving enough for their retirement yet 2/3rds are also gambling each week on the lottery, bingo and the pools

• 30% of people felt they will need between £15-20,000 pa to live comfortably in retirement which would require a pension fund of almost £200,000 yet the average annuity purchased in 2009 was approx £1500 with an average pot of £25000

Inefficiently!

And....

87% want to retire on an income greater than £10,000 pa yet 40% of those questioned on this admitted to having no pension savings at all

15% of people between 61 & 65 intend to carry on working beyond their normal retirement age , as they realise they will not be able to live on their pension income alone

A quarter of people between the ages of 30 and 40 admitted they would reduce their pension contributions before reducing luxury expenditure if they had budget constraints

The Department of Working Pensions estimates there are around 7 million people who are not saving anything or not saving enough to generate the type of income they are likely to want or expect in retirement.

In other words.....

If we ignore it, it will go away...........RIGHT?

Wrong !• Dr Ros Altmans survey concluded that “planning for retirement is not easy, but it is vital if

people are to avoid long-term poverty in old age”.

• And Aegon’s survey concluded -

The report was entitled ‘A rose tinted future?’

“It would seem many people are unaware how much money they need to protect their families and plan a comfortable retirement and have little comprehension of their actual future financial needs. Even though people are aware they are not planning enough for their future financial security, the research also reveals a third of respondents are unwilling to seek proper financial planning and advice. It is those people who are at most risk of facing financial poverty in retirement.”

So, how do WE help OUR clients overcome this?

.

1.Vision It

2.Plan it

3.Monitor It

Simple...we do 3 things well

1. Vision it....

When will it be? What will you spend your time doing?

How much is it going to cost?

2. Plan it....

Establish investment strategy

Establish suitable products and providers

Establish contribution amount

3.Monitor it....

Annual MeetingsMeasure

performance towards target

Make adjustments

where necessary

Monitor legislation changes

We also use specialist software to make sure we get it right

And our online investment platform can give you visibility of your investment 24/7

...so you always know where you’re at

I

Retirement Planning Program

You vision it

We plan it

YOU benefit

For more information about how are retirement planning program can benefit you

visit http://www.idealfinancialmanagement.co.uk

or email mailto:brian@idealfinancialmanagement.co.uk

Ideal Financial Management Ltd - 142 Thorne Road, Edenthorpe, Doncaster, DN3 2LU. Telephone: 01302 880140 . Ideal Financial Management Ltd is authorised and regulated by the Financial Services Authority. Ideal Financial Management Ltd is detailed on the FSA's Register and our FSA Register number is 209535. The FSA register can be viewed at www.fsa.gov.uk/register/home.doc The guidance and/or advice contained within this slideshow is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.

The value of your investment can go down as well as up, and you may not get back the amount you originally invested.

Levels and bases of relief's from taxation are subject to change and their value depends on the individual circumstances of the investor.

We do not act on a discretionary basis when making investments to clients portfolios so a client signature will be required before any adjustments are made.