Pensioner counting state pensionGeorge Osborne’s Autumn Statement provided evidence – if such was needed – of just how dramatically the financial landscape is changing.

It also highlighted something that savers and their financial advisers need to act on now; which is that those changes are coming at increasing speed.

When he stopped banging the drum for a consumption-led economic recovery, the chancellor announced a measure that will affect everyone under the age of 50; that the government plans to accelerate delays in the state pension age (SPA) from the current 65 (already due to rise to 67) to 68 for 40-year-olds, rising to 70 for those in their 20s.

Even before chancellor had sat down, actuaries and statisticians began extrapolating those figures to reach the conclusion that SPA could eventually reach 84 for those born in the year 2050 when the average life expectancy is estimated to be 104.

Of course, advances in longevity are making the state pension ever more unaffordable, particularly so when government spending seems set for semi-permanent retrenchment.  It is something that any government of whatever political hue would have to address.

After all, when the state pension was introduced in 1909 it kicked in at the age of 70 and the probability of a man of 20 living long enough to collect it was only 35 per cent.

Demographics like that enabled government to seem compassionate without being reckless.

Unfortunately, until now no government since 1945 seems to have realised that advances in healthcare combined (mercifully) with an absence of a major, population-thinning war have created an ageing population that needs, increasingly, to be financially self-reliant.

It is that other element of the equation, the need to finance our old age ourselves, that has been ignored to the peril of large swathes of the population.

Something that George Osborne did not mention in his Autumn Statement was that just three days earlier the Bank of England revealed the biggest fall in savings for 40 years.

A total of £23 billion has flowed out of long-term savings accounts in the previous 12 months, equivalent to £900 for every household in the country.

All the signs are that that cash is being spent on consumption rather being diverted into more rewarding financial vehicles.

Ros Altmann, a pensions expert and former policy adviser to Downing Street, was quoted by The Telegraph as saying: “The figures are desperately worrying.  People are stopping saving for the long term because all the policies of the last few years mean you would be a mug to save.”

The dirty truth is that neither this nor any government really wants anybody to save their money.  Politicians would far rather we splurge and generate a vote-winning consumer boom as a substitute for a properly thought-out long-term economic strategy.

This is creating a nihilistic live today let tomorrow take care of itself attitude which has terrible implications for our society.

Unless you relish the idea of working on into your 70s or 80s and relying on an increasingly meagre state pension (assuming it is not abolished by then) to keep you in your remaining years, you simply have to accept that you have to take your financial future in your own hands.

The best first step towards this is to talk to an independent financial adviser such as ourselves at The Whitehall Partnership who will dispassionately and objectively analyse your current circumstances and prospects, help you construct a savings and investment portfolio that will fulfil your long-terms ambitions for yourself and your family, reduce your exposure to inheritance tax and steer you away from the expensive traps that many financial services providers set for their customers.

To arrange a free initial consultation at a place and time of your own choosing call us today on 0845 43 49 250.

 

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