It’s true. The latest statistics show that we are living longer than our parents and grandparents did.
We are, however, less aware of the implications that has for our pension saving. The fact is, if we had only the same level of pension provision as our parents and grandparents, that might not hack it any more.
Now, financial advisers are always thrilled when our area of endeavour pushes a new word into the English language. So today, I have a new term for you. ‘Unretire’.
But first I have some numbers, courtesy of the Northern Ireland Statistics and Research Agency Nisra.
First of all, due to improvements in life expectancy, the Northern Irish population aged 65 and over is expected to grow by 79.3 per cent by 2037. That’s just NI, but it’s a UK trend. Think of the pressure that’s going to put on the state pension system.
Where governments see costs, they also see cost cuts. Don’t assume that the state pension will be as generous as it is today in 20, 30 or 40 years’ time.
After we hit 65, many more of us are living a further 20 years or more: the population aged 85+ is now 2 per cent of our population. This might not sound like much, but it’s 36,500 people, and of those, 278 have reached 100!
That’s a lot of telegram signing for her Majesty.
We can even look at where the longest longevities are! The proportion of people aged 85+ ranged from 1.4 per cent or 2,100 people in the Derry and Strabane Council area, to 2.4 per cent or 3,900 people in Ards and North Down. There’s something in that water down in Kircubbin.
Which brings us to the phenomenon I mentioned above, that of ‘unretiring’.
Researchers at the University of Manchester and King’s College, London have found that a quarter of retired people ‘unretire’ and go back to work within 15 years.
It may be an indication that pensions today, unlike in the past, are not quite enough to get by on: the boffins who did the research say that those of us still paying off our mortgage in retirement are 50 per cent more likely to unretire.
But the key finding was this: going back into the workforce is significantly easier for higher-educated people, and more difficult for the less educated.
The prospects for earning beyond retirement age are clearly linked to having, as the researchers quaintly put it, more ‘human capital’. You stand a better chance if you have a qualification or a profession.
The downside applies to those who do not, or as they state, ‘retirement reversals’ to bump up retirement incomes might not be a realistic option for people in poorer financial situations.
Those who do go back into the workplace by unretiring are one side the coin – but there are many who cannot afford to retire in the first place, which brings me to another phrase coined by financial experts in recent years. These people are ‘trapped in the workplace’.
With these demographic and social trends now gathering momentum – an aging population putting increasing pressure on the state pension system – planning for our own provision for retirement has never been so important.
The time to act is now, by making a sound financial plan with the help of a qualified financial adviser - if we hope to enjoy a comfortable retirement, without the need to ‘unretire’!
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005 . Further information on Facebook at “Kennedy Independent Financial Advice Ltd”.
