You don’t need an independent financial adviser (IFA) to tell you “you can’t have it all.”
Once choices are made, financial or otherwise, there has to be sacrifices. A high-flying career will probably mean that quality time with the family is restricted.
“Not spending enough time with the kids growing up,” is a frequent lament from famous names as they look back.
It’s easy and predictable that we envy different lifestyles, focusing on the advantages and ignoring the downside. Believe it or not, moving from one luxury hotel to another is not all it’s cracked up to be – one fine-dining “room service” menu looks much the same as another, however exotic the food.
It is understandable for the old to look longingly at the young – if only because it’s better to be closer to the starting line than the finishing one! It makes less sense for the young to be wondering why the older generation seem to have it all.
Unfortunately, that’s what many of the headlines are promoting at the moment – Pensioners ‘are now earning more than those still in work’.
A recent study by the Institute of Fiscal Studies (IFS) predicted that two in five people retiring today will be better off than they were in their working life. Statistics showed that pensioners’ average net income is 3% higher than those of the working-age population.
As usual, the continuing rise in property prices has played a part in that development. Also, until the recession of 2008, these individuals generally saw a good return on savings and investments, which also benefited their pension pots.
The bare statistic that emphasises the impact of the above is that pensioners are now less likely to be poor than working families; 30 years ago, they were at least three times more likely to be poor than working families.
That is likely to continue, especially with the new state pension coming with a “triple lock” guarantee. State pensions will rise annually by whichever of the following is highest – inflation, earnings growth or 2.5%!
Already, experts, including those at the IFS, are warning that this guarantee is unsustainable and “needs to end”. It is almost certain that won’t happen soon, as the Tory government is committed to the policy until 2020.
The IFS added: “It is unlikely that later generations will do as well. Future state pensions will be less generous on average, there has been an extraordinary fall in rates of home ownership, and, in the private sector, a collapse in membership of defined benefit occupational pension schemes.”
“We have achieved an astonishing turnaround in the incomes of pensioners over the last three decades. But the longer-term future looks very uncertain. Those now in their 20s, 30s and 40s may well end up with lower incomes in retirement than their parents.”
At one time, women appeared to have the upper hand, with a retirement age of 60 (five years earlier than men) and a greater life expectancy. That, too, is now changing for a variety of reasons.
The state pension age for men has stayed at 65; it rose to 62.5 for women in April 2015. The plan is for it to be the same for men and women – 66 – by October 2020; and 67 by 2028. After that the government will review it in line with life expectancy.
In the recent years, men’s life expectancy has been rising quicker than women’s. The Office of National Statistics (ONS) revealed the life expectancy gap between the sexes has closed quite dramatically.
One of the main reasons for this has been the reduction nationally in the heavy industrial jobs that used to cut men’s lives short – while more women have been entering the workforce.
ONS added: “The decline of the mining industry and the move away from physical labour and manufacturing industries towards the service sector is a likely cause, along with a reduction in the proportion of men smoking.”
Recent information from the World Health Organisation (WHO) highlighted another reason for this closing gap.
The WHO declared that Europeans were the “world champions” of unhealthy living – and women in the UK can expect to die earlier than almost every other country in Western Europe (only Denmark was lower).
The charity, Age Concern, reacted: “It is deeply concerning that the UK is lagging behind almost all of the most developed nations in Europe in terms of life expectancy for women.
“Even within England, women in the areas with the highest life expectancy live almost seven years longer than those with the lowest.”
WHO Europe also highlighted the fact that women in the UK are more likely to die from cancer, diabetes, heart disease or conditions of the digestive system than anywhere else in Europe. Yet, the figures for British men were average.
The ONS report found for the first time that this country’s wealthiest and most successful men can now expect to live longer than the average woman – only just, 82.5 years to 82.4, but a significant change.
The closing of the gender gap also means that the time a widower, or more likely a widow, spends on their own has been greatly reduced; that, too, has quite an impact on the immediate family, as well as the state and social services.
For a free, no obligation initial chat about your individual finances, call us on 0800 0112825, e-mail info@wwfp.net or take a look at our website www.wwfp.net.
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