If you’d had any illusions about retiring whilst you were young(ish) and enjoying your senior years lapping up the sunshine, doing crosswords and telling the youth of today how they’re doing it all wrong – then think again. Because the truth is that, unless you’ve got pots and pots of money, you might have to work until you’re at least 70.
Shuffling paper or staring at a computer screen until you’re a septuagenarian might seem grossly unfair compared to generations past, but it’s the only way that governments will be able to fund pensions in the future. We’re all living longer and it’s estimated that by 2050, there will be more than 2 billion over 65s worldwide – nearly three times more than there are currently.
Whilst living longer is obviously a good thing, the downside, is that the state needs more money to fund us all in our retirement. A study of eight countries by the World Economic Forum (WEF) found that the pensions savings gap (the amount of money needed to give pensioners a decent income) would rise from $70 trillion to $400 trillion by 2050. In the UK alone, the gap would be $33 trillion (that’s a lot of zeros).
Clearly, $33 trillion is a lot of money and no amount of rummaging for loose change in pockets, down sofas or in the Bank of England itself, could drum up that amount and sustain it. The state pension age in the UK is now linked to life expectancy and will rise from 65 in 2018 to 68 by around 2046; so, if you’re in your thirties now, don’t expect to be drawing your pension anytime remotely soon.
So, what’s a hard-working youth to do? Basically – the advice from the WEF is to start saving…now. Putting a bit by to line a nest egg for the future, might not seem like the most rock ‘n’ roll thing to do in your fancy-free twenties and thirties, but the WEF recommend that you should be saving at least 10-15% of your annual earnings for a cushty retirement.
And the best way to line that nest? Well – that’s up to you, but a little bit saved each month in a savings account or cash ISA is a quick and easy way to kick start your pension pot – so why not impress your elders and prepare for tomorrow – start comparing, today.