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Pensions – not just something for “oldies” to think about

It’s a fact of life that anyone just starting out on their career is unlikely to be thinking about what life will be like when that career draws to a close. The demise of the final salary schemes, once so prevalent amongst many of our industries, probably hasn’t helped either. These gilt edged perks just came with the job and were handed over, along with the gold watch, after years of faithful service.

How times have changed. Not only is the number of people with a “job for life” decreasing but those same people are becoming increasingly responsible for making sure their retirement years are financially covered.

How much?

A simple look at the numbers should jolt a few people into giving their pension arrangements some thought. Forget the State Pension; at a maximum of £110 a week it’s hardly going to cover a trolley full at the supermarket, a point confirmed by figures from Aviva. According to the insurer, the gap between what the state provides and what you would need for a reasonable standard of living is £10,000. A sobering thought made worse by the fact that it’s the biggest gap among the prosperous countries of Europe.

You’re having a laugh!

It is clear then that to make up the difference you either need to have won the Lotto, stashed a fortune under the mattress or set up a personal pension. However, how many people realise that to get £10,000 a year from a pension you need a pension pot of £200,000?

The answer to that question is not many according to the Association of British Insurers. Their figures show the average pension pot at a mere £25,000 with only 6% exceeding £100,000. Figures Hardly likely to keep one in the situation one has become accustomed to.

Act now

So, regardless of how old you are or how long you’ve been in a job, it is never too early to give some serious thought to what life will be like when you’re on permanent gardening leave. It would still be a nice gesture to get the gold watch of course, just make sure you don’t have to pawn it to keep the heating going through those cold winters.