Do you know anyone who walks in their sleep?
Well, according to the Office for National Statistics, you probably do. Just look in the mirror.
Figures released last week by the ONS suggest that 20 million working-age adults may be sleep-walking towards a disappointing retirement. That could mean you, if you are old enough to work, and are under retirement age.
The population of the UK is 65.14 million. The working population is 40 million.
Just over half of us (54 per cent, according to Aviva) believe we are going to have the retirement we are hoping for, financially speaking.
However, less than half (42 per cent) of us say we understand enough about pensions to make decisions about retirement.
Over two-thirds of us (68 per cent) are unaware of how many years of retirement we may have to fund.
So I’m here to tell you: life expectancy at birth in Northern Ireland is 83 for a woman, and 78 for a man. That’s the numbers people at the ONS again. But those are just averages, though, and if you reach 65 you could live until you’re 90. We have no way of knowing. We could drop dead tomorrow, or get our telegram from Buckingham Palace.
Despite this, we continue to sleep-walk. Many of us are saving at minimum levels for our pension. Aviva tells us that most new savers are saving at minimum levels – currently one per cent of employee salary, matched by one per cent from the employer. At minimum levels, few will enjoy the retirement income to which they aspire.
The one piece of good news is that auto-enrolment has brought 8 million people into pensions since it was introduced in 2012. The not so good news is that we are moving into an era where lack of planning is going to mean pensioner poverty and retirement hardship.
Nearly a third of UK pensioners are now living in poverty, placing the UK in the bottom five in Europe.
UK pensioners are now worse-off than pensioners in 22 other European countries, coming in behind Lithuania, Romania, and Slovenia.
The only nations that currently rank lower than the UK for pensioner poverty are Latvia, Estonia, Bulgaria and Cyprus.
The European Union has traditionally defined ‘poverty’ as surviving on an income less than 60 per cent of the national average wage. Government figures show the average weekly wage in 2017 is £528. That means you are in poverty if your weekly pension is less than £316.80.
That 80p is important. Inflation is currently 2.7 per cent. Okay, it’s predicted to fall to 2.2 per cent by the end of this decade, but it still has a devastating effect on our spending power. Forecasts for the future have to be taken into account when working out how much we need to be saving into our pension.
So many of us get it wrong. Living below the poverty line now applies to almost a third of UK pensioners.
Things are not the same as they used to be. This is the age of austerity. For 20 years, the state has been cutting the costs of its pension provision, and that puts the onus on us to take care of ourselves. So many of us grew up in an age when our retirement income was almost taken care of for us.
We need to seek advice. We need to wake up. Unless we are sleep-walking, of course.
Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005. Further information go to “Kennedy Independent Financial Advice Ltd” on Facebook
