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Work in progress

’The challenge then is great yet simple. We must get people eng-aged in a long-term programme of saving’

People don’t have to retire. They can carry on working if they like. I am not sure how often highly processdriven services are reminding folk about this. Mind you, how many people do want to carry on working?

The Aifa retirement benchmark study clearly demonstrated that the solution for many at retirement when faced with the reality of not having enough money is to carry on working.

Working a few more years may seem reasonable as we keep being told that we will all be living for so much longer. However, we must also remember that the statistics are quite clear in telling us that we will have a healthy period in retirement, say, 8-10 years for a male at 65 and then the average person will move to a period of declining health, disability and perhaps dependency. So if the individual is going to defer, they must recognise that it is the healthy years they will be using up and not the later less attractive years.

The challenge then is great yet simple. We must get people engaged in a long-term programme of saving. Getting the individual to recognise that it is now down to them and no one else is essential. The days of employers who would “see you right” have gone although we must now also recognise a real issue for the employer. The removal of compulsory retirement ages will inevitably create a real headache for many, as some employees simply say: “I cannot afford to retire, so I will carry on.”

In turn, the employers are about to be faced with the prospect of funding pensions for people who may never have wanted them and the burden of communicating the options available to an audience which is not particularly engaged.

Oh for the adviser who can make the topic engaging and can show the way through the maze. For most people, there are two big financial commitments. First is to repay the mortgage and at the same time to fund for a pension.

It is not a surprise to know that most people can tell you exactly what their outstanding mortgage balance is yet cannot tell you the size of their pension fund or even how much they are targeting the fund size to be.

In adviser sessions recently, I have promoted again the simple tactic of getting hold of clients from their forties and telling them how much they have got, suggesting how much they might need and setting up a programme to achieve this. In turn, the adviser can create more avail-able income by using both tax allowances in a household and funding both partners in a relationship so that at the other end income is as balanced as it can be. Everyone should know how much they might need and have a plan to achieve this. I hope some adviser firms will take it as a mark of success to know that none of their clients will need to defer.

Steve Lewis
Managing director
The Retirement Partnership


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