This is the first of a series of blogs on pensions which you can find in the TAG CLOUD under the heading “PENSIONS CRYSTAL BALL”.
Predicting how much money you will need to pay for your retirement is more and more difficult as we live longer. Here are some of the issues you need to forecast before you have an answer:-
- How long am I going to live?
- How long will my partner live?
- What will I need for health care in my advanced years given that the NHS is short of cash and not renowned for looking after older people?
- What will I need for the years of leisure between retirement and my final moments? My bucket list of things to do?
- How much of a legacy do I want to leave?
These are imponderable questions, even at 65 when you’re setting out on retirement. How much more difficult are they when you are just starting work? Then you have even more questions to answer:-
- What career lies ahead of me?
- What other demands will there be on my money – family / education / housing?
And biggest of all:-
- What will happen to inflation over my life time?
- Will the Government change the rules on taxing pension savings?
- Will the Government change the retirement age?
You certainly cannot rely on the Government. They have a terrible track record of predicting the cost of anything. The only thing you can be sure of with their estimates is that they won’t be enough – just look at the Olympics ! With pensions for themselves and their staff, they don’t event try to save, they just rely on being able to increase taxes.
The pensions market is in freefall at the moment and the current economic crisis is likely to lead to more changes in legislation around retirement. Answering the above questions was always difficult; it is about to get harder still.