In a campaign that has been going on for decades, the ‘WASPI [Women Against State Pension Inequality] women’ demonstrated this in spades, and laid bare the emotional and physical issues that can blight people when their futures are thrown into doubt, when they are unaware or uncertain of when they are able to retire, when they will get the state pension, and what to do if the timing of that is pushed further into the future.
From a financial services perspective, and certainly from an adviser point of view, we might all be able to understand what is at stake here and why it is so important to plan and prepare for the future.
We should also recognise there will always be a significant cohort of people for whom this isn’t possible, or are unaware of what is required of them, and therefore, what the consequences might be when they reach that stage in their lives.
Heads buried in the sand
Without wishing to sound too morbid about the way we as a society deal with all things retirement-based, it is also possible to see a widespread approach that mirrors that of death.
By that, I mean people prefer not to think about it, or believe that something will turn up to help them solve it, or the worst can’t happen to them, and therefore we have a tendency to put things off or not do anywhere near enough.
I read some research from SmartSave recently that I believe effectively sums this up. Nearly half of those surveyed (44%) believe they will be able to retire by the time they reach state retirement age, despite 48% of those aged 55 or under admitting they don’t have a retirement plan in place to allow them to do this.
How might they actually achieve this, you might wonder?
58% said they would continue to work in some capacity, which of course, begs the question, what if they’re unable to work? 37% don’t even know how many pension pots they have, let alone what might be in them, and presumably what they might provide in terms of income when they seek to access them.
A realistic understanding
There are so many questions and issues raised by this, including whether people actually know what the current state pension per week is – £203.85 in case you didn’t – whether they would be able to live on that if they had no further pension provision, whether their current retirement saving is enough to allow them to retire by that time, and if not, what might they do between now and then in order to make it a pot big enough to do so, etc.
With an ageing population, and the likelihood of more and more people not being in a position to either retire at that age, or to be able to fund the lifestyle they expect to have, a big part of me wonders why such stories are not dominating the news agenda on a daily basis.
Certainly, there needs to be a much more concerted effort and approach to ‘finding’ these individuals, signposting them to advice, and outlining what their current situation is, how it might change before retirement, and what options they might have should they not have those retirement savings plans in place.
Planting the seeds early through advice
The role of advisers here is absolutely fundamental, not just in the context of later life lending and utilising housing equity, for example – although this is going to play an increasingly wide role in helping people in such situations – but we need to approach this much earlier in people’s lives.
Particularly when it comes to speaking to clients who might believe they are a long way from retirement, but who clearly need to be, at the least, thinking about their options and their future.
This issue does not go away for anyone, and we should not follow the path of many people cited above who prefer not to think about it. It’s our job to think about it, to put it ‘on the table’ for people to assess, and to provide them with options and solutions so that they have the best chance of retiring when they wish to and being able to fund the retirement they want.
Later life advice is required, but later life advice should start well before later life.
We need to be on top of that, because we have a large number of people who could clearly benefit from it.
