The government busts some pension myths
Pensions can appear confusing. But maybe they’re not as complicated as we think. The government has recently challenged some common perceptions about pensions:
- It’s not worth saving into a pension: FALSE, says the government.
- It’s going to be complicated: FALSE, says the government.
- My house will be my pension pot: BE CAREFUL, says the government.
- I can only pay in a small amount so it isn’t worth it: FALSE, says the government.
- I’m too old to start saving: FALSE, says the government.
- The state pension will be enough: BE CAREFUL, says the government.
As with many things related to pensions, it may be dangerous to jump to conclusions. You can read the government’s full thinking on their Workplace Pensions myth busters page… just watch out for the monster!
For more information, you can also read Aviva’s quick guide to pensions.
The most wonderful time of the year… or is it?
The festive season is upon us. Decorations are up, Slade is on the radio, and parties are being planned. For many it’s a time of great celebration, but the charity Age UK has reminded us that the cheer may not be shared by all.
60% of people aged 65 or over are not expecting festive happiness to be part of their Christmas. Top of the list of worries for older people is missing loved ones who have passed away, followed by the fear of not being able to see everyone they would like to. Last year, Age UK found that nearly 400,000 people aged 65 and over were worried about being lonely at this time of year.
Age UK believes that “no one should have no one at Christmas”. This is the sentiment behind a campaign calling on everyone to check on their older neighbours, relatives and friends over the festive period. The gift of time may be the greatest gift of all.
You can read more about the Age UK campaign on their website.
Support for older people from Aviva
Each year Aviva manages a Community Fund of £1m to support good causes across the UK. Public votes decide how this money should be invested. This year, one such cause was the Young Person of the Year (YOPEY) ‘befriending’ charity which celebrates the great work done by young people across the country to support the older generation. You can read more about this and the other Aviva Community Fund beneficiaries here - https://community-fund.aviva.co.uk/cms/
Invisible spending, made visible
The next time you queue for that latte, remember this...
Aviva research has found that UK adults are spending £48bn each year on nothing – or ‘invisible spending’ as we call it. This term refers to the small – almost invisible – amounts we spend on a regular basis without paying much attention to how they might add up. Examples of favourite ‘invisible spending’ items would include teas and coffees, snacks, shop-bought lunches and quick after-work drinks.
The average person spends £18.23 each week on these items. That’s £948 each year, or more than £47,000 over a full working life.
If the typical 20 year old was to channel their ‘invisible spending’ towards their pension saving, Aviva estimates it could amount to a whopping £136,000 at retirement. When asked, seven-out-of-ten adults said they would be willing to cut back on their ‘invisible spending’ in order to save more.
Enjoy that latte today… or maybe buy that coffee shop when you retire. The choice is yours!
Aviva have made a video about invisible spending. Have a look now – it’s a real eye opener!
All change in China
Since 1979, China has maintained a controversial ‘one child’ policy – prohibiting parents from having more than one child in an attempt to stem population growth. Now all that may be about to change: the Chinese government has announced it’s relaxing the policy by permitting families to have up to two children.
Widespread criticism played its part in encouraging the change, but so did a different kind of pressure within Chinese society. The policy has resulted in a reduced workforce, at a time when the population is ageing. Today, about 30% of China’s 1.3bn population is over the age of 50. As with many countries in the world, this ageing society is putting pressure on the state.
Recent research published in the Lancet brought this situation to life by comparing life expectancies in China’s 33 provinces with those around the world. According to the report, a baby born in China in 1990 would live on average to the age of 68. One born in 2013, however, could expect to reach 76. In Shanghai, life expectancy is now 83 – as good as Switzerland. People in six of the provinces live longer than in America.
Moving closer to home
Life expectancy is also changing in the UK. You can use Aviva’s Retirement planner to estimate how long your retirement might last, and consider how you might save for what may be a longer period of later life than you might have imagined.
Britain’s changing population
Recent figures from the Office of National Statistics (ONS) stated that Britain’s population is expected to increase from 64 million in 2014 to 75 million by 2039. The shape of this population is also set to change over the same period, with our average age rising from 40 to 42.9 and the number of centenarians rising six-fold from 14,000 to 83,000. That’s nearly enough to fill Wembley stadium!
Other reports have shown this aging population manifest itself in other ways. For the first time, in 2014 more babies are being born to women over 35 than under 25 and Cigna insurance reported that ‘middle age’ is now expected to run until we’re 68.
Perhaps sadly, it has also been reported that divorce rates amongst the over 60s have risen since 1990 – while among the rest of the population they have fallen. This statistic has been matched by a rise in the number of older people using the internet to find love. The BBC reported that more than one-in-five 55-64 year olds in Britain had met a new partner or date through a website or app.
Love in later life, while bringing happiness, may however also carry a risk. Scotland’s oldest woman, Jessie Gallan, passed away earlier this year after celebrating her 109th birthday. She was reported to have said the secret to her long life had been “a bowl of porridge every day and staying away from men”.
Many of us will no doubt pursue a somewhat different lifestyle if we’re lucky enough to enjoy a long retirement. Whatever your plans, there are some things you might want to consider in advance, to help you look ahead with more confidence. Aviva’s short video is a good starting point.