A man was having a drink with his friend in his local pub, and he said: “More than anything else, I would like to know the place where I’m going to die.”
His friend asked why, and he replied: “I wouldn’t go there!”
But before that happens, with average longevity of 89 for women and 86 for men, we’ll hopefully enjoy a good 20 years of retirement.
Before getting to our final day, it’s important to know how comfortable we will be when our working life has ended. We need to be aware how substantial our pension will be.
A new survey by Which? magazine has found that less than two-thirds (61 per cent) of people aged 50-64 were aware of the changes that have taken place in state penson provision in the last year.
For instance, 85 per cent of people don’t know what age they will be before they get it. From November 2018, the retirement age will be 65 for both men and women. In 2020 that increases to 66, and if you are only in your 50s now (sprightly!) you will be 67 when you retire in 2028.
The basic and additional state pensions are going to be replaced by a flat rate single-tier with a full level of £155.65 in April. Only a third of people have even a vague idea of that figure. But they should.
Just take a £20 note off them, and put a match under it. You’d soon hear them.
Before thinking £155 sounds good, check the price of a gallon of diesel. And even if you can afford to take your husband for a drive in the country, just remember: you can’t eat scenery.
A kiddies’ meal in my local chip shop costs £3.50 now. I was feeding two of them today. It includes a drink. I needed it. By the time you retire it’ll probably be a fiver and the state pension will only buy a dinner out for two adults.
Also, the goalposts keep moving on this, so watch this space.
Obviously the state pension is separate from your job or workplace pension, which is not subject to the same rules. You may be able to take that earlier. Be nice to your boss.
When I say the goalposts are moving: the government has just appointed a pensions expert called John Cridland to oversee a consultation on how the state pension should or shouldn’t increase, and whether the state pension age will rise in future. For ‘whether’ read ‘when’.
As part of it they’re talking about considering a higher state pension for manual workers, whose life expectancy is generally expected to be shorter, and for people who have been paying national insurance (NI) for more than the norm.
While we’re on the subject of NI contributions – it used to be 30 years working in the UK to qualify for the full state pension, but now it’s 35. This is because of the growing numbers of people living for a long time after their retirement. There are so many of us now living to be 90 – when we last counted in 2012 there were over 400,000 people aged 90-plus in England and Wales alone, and 12,320 who were 100.
So the bottom line is: the government is tinkering with your pension. It has been for a few years. And you can be certain it’s not in your favour.
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005
