In the land of the soon-to-retire, the man with the crystal ball is King

Hard on the heels of our blog last week on the ravages of inflation on retirement income comes news today that a stonking 14,000,000 people have pensions far worse than their parents and will be obliged to downgrade their standard of living the day they retire. It’s in the Daily Telegraph so it must be right.

The reasons are clear. For the foreseeable future (at least) the world will be in economic turmoil. The sad news is that the UK is not the best placed country in the global wealth hierarchy. We won’t avoid the economic suffering. GDP is falling. An ever increasing world population is forcing an ever increasing spiral on everyday prices. Real income will inevitably fall and, unless people manage their expectations downwards, the current mindset will inevitably drive savings lower.

How do we change that mindset? In the short term it’s hard – ever since the sell-off of council houses in the 1980’s, followed by rampant house price inflation and the concomitant boom in credit, Mr and Mrs UK have been in spending mode. More importantly, newly fuelled by property equity, they have been in borrow-and-spend mode.

When Harold MacMillan told the nation ‘you’ve never had it so good’ back in 1957 the sprees of the eighties were not even a twinkle in Maggie Thatcher’s eyes. The shocking truth for the forthcoming cohorts of retirees is that they will never have had it so bad. You need significant degrees of far sight and optimism to see the end of it.

However the school of hard knocks always helps people get their heads round a change of habit. Whilst we can’t soften the blow in the short term, in the medium to long term the tried and tested mantra of education, education and education will be the best remediation we can offer.

However we mustn’t just be content to theorise and pontificate about the future. People need practical help and real time, real world illustration that prompts a degree of haste in changing their behaviour. They need ‘tools’ so they can work out their situation for themselves.

The good news is that recent developments in online and mobile communication means there have never been better channels of communication – today we can put the tools (or rather ‘Apps’) straight into the palm of the consumer’s hand.

It’s time for tough love. We have to cut out some of the luxuries of today to ensure some degree of comfort in retirement. It’s a jungle out there – nobody should go into it ill prepared or unequipped.

If you suddenly feel the need for an App coming on, give us a call on +44 (0)1483 400 680.