Relying on the State Pension to look after you in retirement is an exercise in self-annihilation. Believing that this government or future administrations will provide you with enough to just survive, let alone to live in luxury, is pure fantasy and is something that we here at The Motley Fool are regularly banging the drum about.
Can you envisage existing on the £164.35 per week that the pension currently provides? I certainly can’t. Yet things could be even worse than they are now by the time I come to hang up those metaphorical workgloves.
The deteriorating condition of the public coffers is well publicised and this, combined with the stresses created by a rapidly-ageing population and increasing life expectancies, means that government policy is constantly changing and hitting pensioners hard in the pocket.
Rule changes brought in this month mean that the age at which the State Pension can be claimed will keep increasing until it hits 66 in 2020, and this is set to keep rising through the next couple of decades. Current rules will hike the age at which the benefit becomes live to 67 by 2028, and again to 68 once 2039 comes around.
Many commentators are already tipping that the threshold age will eventually move above 70 years, possibly as soon as the 2040s given the likely state of the public purse. And that’s before taking on board the hit to the country’s finances that European Union withdrawal will create in the medium term and beyond.
More bad news!
Speaking of the B word, government handling of negotiations threw up some fresh State Pension-related nasties on Tuesday.
The Department for Work and Pensions announced that while retirees living on the continent will still be eligible for the State Pension in the event of a no-deal Brexit, and would also be eligible for upratings in 2019 and 2020, it could not provide any assurances for further inflation-linked increases beyond this period.
A department spokesman said that “we would wish to continue uprating pensions beyond that but would take decisions in light of whether, as we would hope and expect, reciprocal arrangements with the EU are in place.”
I don’t know about you, but the state of negotiations between Britain and the 27 European nations and the decline in relations between both sides doesn’t fill me with confidence that a favourable outcome will be reached.
What are you waiting for?
This is clearly a big deal for those already living on the continent of pensionable age or otherwise, as well as individuals who are hoping to one day retire to sunnier European climes.
But whether or not you plan to eventually move to foreign shores, the need to grab the bull by the horns to guarantee your quality of life post-employment has never been more urgent. Uncertainties over the State Pension, as well as the paltry rewards on offer from traditional savings products like cash ISAs, mean that taking charge of your investments is an absolute necessity. But don’t fear, there’s plenty of expert advice to help you avoid retiring in poverty. It’s time to get busy planning your retirement, and the sooner you start the better.