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Dream on

Not so terribly long ago, when I was unwittingly overseeing the demise of a certain monthly personal finance magazine, may it rest in peace, I got into the habit each autumn of commissioning a feature on retirement – not least because it allowed me to use a picture of a tropical beach to brighten up the November front cover.

The accompanying headline was always along the lines of, Retire early – we show you how, although, deep down, I knew the only article that could justifiably accompany such a bold promise would, of course, be extremely short and along the lines of, Build a time machine. Get in it. Go back to your 20s. Start saving.

This brief bout of nostalgia has been induced by the first of a series of retirement-oriented studies that have positively gushed from assorted life companies of late. “Despite the gloomy economic backdrop, the majority of Brits still have dreams and aspirations, from buying their perfect home in the countryside to an idyllic beach holiday,” trill the happy campers at LV=.

According to the group’s third annual State of Retirement report, those already in retirement have shown such dreams can come true, as half aged 60 or more have achieved their aspira- tions when it comes to a home.

As for travel, however, LV= adds: “Despite keeping their holiday dreams pragmatic, the majority of people have not followed their ambitions – 55 per cent say they have not yet been on their idea of a perfect holiday although four-fifths of those hope to still achieve that later in life or in retirement. Yet sadly, of today’s retirees, just a third have fulfilled their travel dreams and only half have had their dream holiday while one in five have given up hope of ever doing so.”

Oh dear. I knew that upbeat tone was too good to last – it is just not in keeping with the prevailing mood on retirement – so over now to the good, good people of Axa Wealth to explain where our nation of dreamers is going wrong.

Some of the group’s boffins – possibly locked up in a base- ment somewhere in Basing-stoke, possibly not – have developed a quantitative index measuring afford-ability and volatility in retirement saving, which suggests the average age at which people in the UK will be able to afford to retire is 71 and a bit.

Unfortunately, according to Axa Wealth’s research, the average age at which people in the UK would like to retire is 58 while the average age at which they expect to be able to afford to retire is 64 – implying a “desire-reality” gap of 13 years and an “expec- tation-reality” gap of seven years. “Clearly, UK pension savers need to mind the gap,” chortles a press release scribe who really should be locked up in a Basingstoke basement.

Still, if even that news is not bleak enough to spur existing and potential clients into taking action to save for their futures, there is always the revelation from Pruden-tial that a little over a third of people planning to retire in the UK this year will do so with incomes below the poverty line, which is estimated by the Joseph Rowntree Foundation to be £14,400 a year. What is more, that figure of 35 per cent is up from 32 per cent in 2010.

The Pru’s Class of 2011 study, which surveyed people intending to retire this year, also found that one in five people will retire on an annual income of less than £10,000.

Women planning to retire this year are even more likely to have incomes below the poverty line, with two-fifths coming in below £14,400 compared with 30 per cent of men. At the same time, 26 per cent of women comp-ared with 12 per cent of men will retire this year with less than £10,000 a year to live on.

Perhaps somebody should mention that to the gener-ations who still have time to avoid that fate as, to return to the LV= research, just three-tenths of those aged 18 to 29 – that many? – and just under half of those aged 30 to 49 are currently saving anything towards retirement. Perhaps they are banking on the invention of the time machine being only a matter of, well, time.

Julian Marr is editorial director of and Thought


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