Look out. There’s a financial horror story heading your way and it is called your retirement, and it involves your pension and your annuity. It really is difficult to overstate the horrendous situation many of us are in, and, unless we tackle this monster now, we will either spend our final years in retirement slaving until we drop, or shivering in absolute poverty. Or both.
During the boom times, we had far more exotic things to spend our money on than dreary old pensions, and during the bust period, we’ve had more pressing financial concerns. But the nightmare is out there. Look at some figures:
One in every three pensioners goes into retirement still owing money on a mortgage. The average debt these pensioner owe is around £43,000, according to equity release provider Key Retirement Solutions (KRS). Yet the basic state pension is just £95.25 a week for a single person and £152.30 for a couple. Hardly enough to repay a mortgage…but there could be some pension annuity income on top, I suppose.
And, one in five has pensioners has outstanding credit card debts, owing on average a frightening £8,892. That could cost another £120 a month to repay.
The average pension fund is a paltry £25,000. That’s enough to buy a single man aged 65 an annuity income for life worth just £34 a week, or £22 if he wants it to actually rise in line with inflation. A couple age 65 would get £31 a week and £19 a week respectively. And, even without debts, retirement could be a bit of a struggle. And who knows what fate awaits annuity rates?
More than half of people who are five years from their retirement believe their pension annuity will fall short of expectations. One in three are either unhappy with their pension arrangements or feel they have wasted their money. No wonder, given that the stockmarket has returned just 1.2% a year over the past decade, compared to 16.1% over the previous ten years.
Then we have the zombie bankers and their toxic debts. Anybody retiring now is probably 27% worse off than they would have been twelve months ago, due to stockmarket volatility and the impact of the Bank of England’s quantitative easing (QE) policy on pension annuity rates. So, we have been warned. Many experts have been banging on about the pensions crisis for many years, but nobody listens, and why? Because pensions are boring, dull, and not even reliable.
