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A just-released OECD study on pensions has revealed how British retirees experience a bigger drop in income on retirement than those in almost every other country in the organisation. From the 34 member states, only Mexican and Chilean pensioners are worse off.
According to the figures, on retirement the average UK earner will receive a pension of just 38% of their pre-retirement income. This compares to a figure of 96% for Holland and 66% for Denmark and an average figure across the 34 main countries in the OECD of 63%.
Even more damning for the UK, Mark Pearson, the OECD’s deputy director, panned pension reform in the country over the last two decades describing the British government as ‘completely delusional’ for thinking that state pensions can be maintained at current levels without further reform. From which we can gather that the drop could be even higher for future generations especially with final salary pensions becoming a thing of the past and the UK government’s current cost-cutting austerity policies. Looking to the future, Mr Pearson highlighted the urgent need for legislation to introduce compulsory savings by workers to avoid them falling into poverty once they stop work.
So how do you fancy a 62% drop in income on retirement? Doesn’t sound too appealing does it? I’m sure you have plans for how you’d like to spend your golden years – whether that be travelling the globe or enjoying time with the grandchildren in your comfortable home free of financial concerns. If you fail to save, the reality could be far different. You may need to work for longer before you can retire – if health permits, which is far from guaranteed for a large percentage of our unhealthy nation – or you may need to make compromises on living standards such as a smaller home and fewer trips away.
So why wait for the government to act on this if you know what is coming? We all have the ability to take control of our own destinies by preparing for our own retirement with a structured saving plan which takes into account our financial situation and our goals for the future. Obviously, the longer you are contributing those voluntary savings, the more financially secure your retirement will be.
If you would like help in securing your financial future and ensuring that your income doesn’t plummet when you stop working, why not consult one of our experienced and professional financial planners who can help you put in place a savings plan tailored to your unique requirements?