| For many the wish for a long and
happy life may produce unintended consequences! Indeed, longevity
has increased in virtually every country in the world, as advances
in medical science, knowledge and better nutrition enables people
to live longer and more productively. Retirement is supposed
to be the entry point to the "Golden Years"
In an article of 26th April entitled "A Billion Shades
of Grey" the Economist writes that "over the next
20 years the global population of those aged 65 or more will
almost double, from 600 million to 1.1 billion". Clearly
this has a major impact on virtually every aspect of our current
lives, from young to old, from emerging to developed economies.
|It is estimated that in the UK, an experienced
mirrored in most developed countries and in developing countries
where there is access to good medical care, those who reach
the age of 65 will, in the absence of any life threatening illnesses,
live into their mid- eighties. A sobering prospect for those
with little or no long term financial provision. There are already
over 12 500 centenarians in the UK, a figure which is steadily
Doomsday prophets often predict the past into the future
and come up with scenarios which may sell books but often
turn out to be wide of the mark. Nevertheless there is a great
deal that people contemplating retirement can do to ensure
that they are indeed ahead of this curve and to obviate this
demographic time bomb.
What are the megatrends? Firstly governments are unlikely
to be able to afford generous state or even occupational pension
provisions as they are dealing with the ever increasing longevity
of its inhabitants. Companies also have already all but abandoned
their final salary pension schemes in favour of defined contribution
schemes, whereby a lump sum payment, with or without a gold
watch is the best we can hope for. Clearly the onus is shifting
from state and company assistance to personal provision. This
is an opportunity and a threat. It is a wake- up call for
everyone to look to themselves now to make their own provisions
for retirement. That retirement period could well extend to
as much as 30 years!
The pension world is dividing into two categories of retirees
- the ones with flexible professions and careers and those
who have either little in the way of skills and also those
whose skills are narrow and not easily transportable. In future
the former will, should they so wish, continue to work probably
into their 70's and perhaps later. The latter will find that
they will have to rely on whatever provision they have made
and possibly less generous government and company pensions.
It is vital for those who wish to pursue income- producing
careers after the normal retirement age should be encouraged
to retrain and stay active. In the UK, the DIY chain B&Q
for example hire men and women into their 70's to work in
their shops, an experiment which has been highly successful.
Lawyers, accountants, teachers, doctors and other professional
persons as well as the self- employed are obvious candidates
for extended working lives. They are the lucky ones, but even
these could find old age a difficult time financially.
Apart from obtaining or maintaining ongoing and income producing
skills, a gradual impairment of state pension provisions and
the gradual erosion of wealth over the retirement years makes
it imperative that proper and regularly updated financial
planning is put in place, as early as possible. Private pension
plans, whereby, in terms of The Richest Man in Babylon (George
Clason), one invests "a part of what you earn is yours
to keep", a percentage of your earnings should be placed
in a private pension scheme to enjoy when employment stops.
Additionally, the acquisition of a capital sum for older age
ensures that the golden years are what they promise. For most,
it is important to make that phone call soon to your financial