“Pension Crystal Ball” 1

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.

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2 Responses to “Pension Crystal Ball” 1

  1. A vexing question: What is a legal amount for a legacy? While I may wish and ponder, as with your other questions, control of my own personal finances is important, and I suspect before retirement one must have given away the legacy to those whom one wishes? After this time when one considerers ones assets the local council and the NHS/social services are very quick to assess the total assets one person or couple may have for social benifits should one fall foul of the benifits system, and then the only sum, one may I assume may have at ones death bed is £14K?(max) the residual after all bills are paid for, and have been allocated state benifits. It is a mind field, and as an individual I cannot anticipate my health/wealth or death, or the help my children/grandchildren may need? It makes me feel impotent and less caring for those I love! I sure this is not true. With my aging mother I am witnessing the state grab and claw what estate she may have, and i am a mere bystander, as I wish her to her last days be cared for in the style she has become used too. This may entail my wife and I’s estate becoming liable for some of her costs in care, if the state do not bear any of the costs, and her estate becomes penniless.
    Life is not fair, and some of the conundrums you pose above as I say are vexing, and by the time one reaches retirement or loss of health it is too late????

    • john graham says:

      Thanks David. Your own experience adds a really good insight to the many dilemmas people face with the ageing of our families. Pensions are a very important aspect of this and are one way of providing for yourself and those you care for. But you still need the chrystal ball to guess the answers to many of the issues, unfortunately, crystal balls are no more reliable than the Government.

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