Recent overseas data has highlighted that indebtedness will play an increasingly important role in retirees’ needs . Personal debt creates a ‘blindspot’ in the method used for determining an adequate retirement. The article goes on to say that:

‘Adequacy is often measured through the use of replacement rates, which are defined as the ratio of retirement income to income while working.’ And, a report from the Organisation for Economic Cooperation and Development last year warned people on low incomes, the self-employed, single people and those aged 55-64 all had at least a 50 per cent chance of missing their replacement rate.

These are worrying trends…

Due to a number of factors including improvements in public health, nutrition and medicine, life expectancy has risen sharply over recent years. Today, the UK average stands at 79.4 years.

And, it’s a well-known fact that we live in a ‘spending’ society; the savings culture that was once so prevalent seems to have slowly eroded away. Debt is commonplace – across the complete spectrum of the UK population.

I’d argue there is a clear need to encourage more people to save for their later years and to focus on their pensions and lifetime planning – is an ‘adequate’ retirement even enough? We have become used to living in a debt-ridden society, which will have a deep impact on those who do live longer; their money will simply run out. Shouldn’t we all be planning to maintain the standard of living we have become used to?

As I continue to advocate, the responsibility rests firmly with the employer – to guide and support their staff and help them to make the right decisions and to plan and save for their retirement. This could either be through a comprehensive financial education programme in the workplace, or via retirement and pensions communication. Either way, they should have their employees’ futures top of mind.

At the end of the day, aren’t we all looking towards a level of certainty in our later years? And isn’t now the time to be saving for the best income possible, and – at worst – an ‘adequate’ retirement?

By Ian Bird, Business Development Director