Five score years or more…
Recently a local newspaper saluted a local resident who reached the grand-old age of 100.
Its not far away that the local papers may soon have to devote an entire weekly page to people living to 100 because people are living longer.
According to the Department for work and pensions nearly a fifth of people living in the UK today are expected to celebrate their 100th birthday. There are 11,800 people in the UK who are currently at least 100, while there are fewer than 100 people who are aged more than 110.
Further getting into numbers, there are around 10 million people in the UK and 1.3 million of those are between 51 and 65. It was further projected that 875,000 of the centenarians are aged over 65 and have already retired.
According to the figures it wouldn’t be wrong to say these people who are living longer have an impact on our pensions and long term care systems and, perhaps more importantly, it will greatly affect your own plans.
Changing landscape
A single pension provides the bedrock for income, for a vast majority of people. Now today it is more than that. The pensions landscape has changed and it is only wise to make the most of your savings so you can sit back and enjoy your retirement.
In the past, as people grew older they reduce their exposure to equities and generally avoid investments that put their capital at risk. But times are changing, nowadays a successful business carries a factor of high risk.
People are living longer and working past their formal retirement age, which is also set to increase to 67 from 65 between 2034 and 2036. The thought of working longer could mean that maybe retirement is not given such a high priority for many in their early-50s.
In the coming future there is a quite possibility that the pensions might not be able to fetch enough money and many will have depend on other investments such as their Pep, Tessa and Isa tax allowances of the years. This non-pension money income might be the only income for many for another 30 to 40 years.
Tax
Many people think that once work is done, there is no need to pay tax but the truth is that they still have to pay tax.
Investors need to ensure that after all the hard work they shouldn’t be paying HMRC after retirement. Use of available tax-free allowances is advisable in order to pay as little tax as they could.
Gone are the days of planning for retirement in a traditional way by relying on the state or your employer for generous final salary schemes. Now your retirement years are your to decide, it depends on you if you wish for a comfortable or a tough life ahead.
That’s why it is important to start planning retirement early. You could get a clear view of your current position by knowing about your state pension entitlement. You can also contact the pension trustees of current and previous employers for a pension forecast.
Many companies have replaced final salary schemes with defined contribution pension schemes which contribute far less thus putting the pressure on the employee to fill up their pension pot.
It is great to think that we have a higher chance of living longer, but it means that we have to make more money and work harder while we can. For the latest official Government advice regarding retirement and pension calculations please click here
