Fearing the inevitable could leave us counting the pennies later on in life. And there’s that Caribbean Island to plan an escape to...
“We’re planning on retiring this year, so we’re selling the house and moving to Grenada. You can both come and visit us whenever you like.”
My sister and I first looked at each other, and then back at Dad and Leonora with confusion and horror. Then, the barrage of questions came. How could you make this monumental decision without consulting us? What about your future grandchildren that we probably won’t, but possibly could have one day? Have the pension freedoms gone to your heads? And most importantly, can you really afford to do something like this, at your age?
When Dad announced his plans at the beginning of 2017, it suddenly hit me. My parents are getting older.
They have both enjoyed successful careers, Dad working in social work, and my stepmother in pharmaceuticals and have been regularly saving into their defined contribution (DC) pension pots. As it turns out, they have will have accrued a reasonable sum by the time they are ready to retire and will be fortunate enough to live in relative comfort during their later years. Perhaps they aren’t the irresponsible adults I accused them of being after all. But research tells us that the situation is very different for many people close to retirement age.
The Financial Lives Survey 2017, conducted by the Financial Conduct Authority, revealed that over a quarter of all retirees will be relying on the State Pension alone as their main source of income. At £159.55 a week, this will certainly have many counting the pennies. Most people said that the main reason for not contributing into a pension was that they felt it was too late for them to start or that they couldn’t afford to pay into one.
Companies need to do more to encourage this age group and also younger generations to save for retirement, so that they do not end up getting caught short. Not everyone will be prepared, or in a position to, sell their property like my parents. We need to do a better job of making people understand that it is never too late, or too early, to plan for the future.
The realisation of how soon retirement can come around got me thinking about my own pension planning. Pensions was never a topic that I had even tried to understand before. I had always assumed that as it wouldn’t impact or affect my life in the present, it was not worth paying much mind to. I’m ashamed to say that I am a part of the 31% of adults in the UK, who don’t know how much money is their DC pension pot. So, the other evening, I decided to bite the bullet. At home, hidden amongst a designated rubble named ‘Really Important Things I Should get Around to Reading’, lay my own neat pile of unopened letters from my pension provider. Reluctantly, I decided that it was time to get over my FOGO, and start thinking about my future more seriously. On opening the letters, I was pleasantly surprised how easy my Scheme has made it for me to understand my pension and the benefits available. They even enclosed details of a website that I could use to keep track of my savings contributions and find out more information about my Scheme.
I am now determined to move out of the 31% and become as savvy about savings as possible and forgo the FOGO. And who knows, if I’m lucky, I could even end up on a Caribbean island myself.