Pensions - Articles - Bonus years are waiting for us


Great news - millions to live to 100 - but on what?

 This seems to have by-passed our pension and retirement planning.
 Who will pay so many people not to work for 30+ years?
 Just saving more will not ensure good future income, it's only a start.
 We must rethink retirement - not stopping work, but staying on part-time.
  
 The Department for Work and Pensions has just released figures highlighting yet again the fantastic news that so many of us can expect to live much longer lives. One in three girls and one in four boys born today will live to 100! All the money we have spent on medical advances, healthcare and improving lifestyles is having brilliant results.
 But this great news seems to have by-passed our pensions and retirement system. The same old attitudes to working lives are hampering proper preparations for older ages. The DWP says that living longer means we must all save more - but that will simply not be enough to ensure decent later life lifestyles.
 With high debt levels and rising living costs, just expecting people to save enough for a traditional pension and retirement will not work. Once student debts are repaid, workers who retire in their sixties might have been able to save for about 30 years but that will not fund a decent income for another 30 years later on.
 We must rethink retirement too, which actually means rethinking our whole life plan. At the moment, we expect to study when young, then work full-time and then retire, stopping work in later life to enjoy leisure, travel and rest. However, many who suddenly stop working altogether find they cannot afford the lifestyle they want because their pension savings have not delivered the promised income levels.
 The traditional concept of pension income is money that older people receive when they stop work. In other words, pensions pay people not to work. Where will this money come from? If people stop work altogether, that money must come either from the state (in other words from people who are still working and pay taxes or national insurance) or from individuals' own resources - their own pensions, savings and other assets. As more and more older people live longer, working taxpayers will struggle to keep paying those who have stopped. It does not need to be like this.
 There is a whole new phase of life waiting for future generations (and for today's workers too). Instead of just the three phases we have now - studying, working, retiring - we can add a fourth phase. Studying, working full-time, working reduced time, retiring.
 Working reduced hours is a phase of life that can bring tremendous benefits. I call this 'bonus years' where people can be working perhaps 2 or 3 days a week, having 4 or 5 days a week free, adjusting working hours to their capabilities, preferences and needs as they get older. This would mean more money coming into the economy and more money for older generations to spend to give them better lifestyles.
 Of course employers will have to change their attitudes too. This is starting to happen and the abolition of the Default Retirement Age is an excellent first step, but far more is needed.
 These changes cannot happen overnight - it will take time to plan for them and employers as well as individuals will need help in seeing the opportunities offered by flexible working in later life.
 If we don't adjust our lives, then millions will be too poor to afford a decent old age, will not be able to enjoy their later years nor have enough to spend to keep the economy afloat either! People are not old at 60 or 65 any more, but they may not need to work full time - they can work some of the time and give themselves and everyone else a better life.
 We cannot solve this with the same old thinking - a radical new future awaits us, let's embrace it.

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