Aviva’s September report into the European pension gap made for some pretty gloomy reading—just what we need as the dark nights are drawing in—but is the situation really as bad as reported?
The claims that not only are the British suffering from the largest pension deficit in Europe but also that we need to save on average £10,000 per year to retire comfortably hit headlines hard. But this £10,000 figure is based on an income replacement rate of 70%, and though there are doubtless those who want to spend their retirement years on back-to-back cruises wearing Hermés and Dior, there are many of us who might have slightly less extravagant plans for old age.
The idea that we need to aim for 70% of our annual working income per year of retirement is clearly a ballpark figure, and little research can be successfully carried out without making at least some generalisations, but each to their own: not only will some of us be very ‘comfortable’ on something closer to 50%, we may also want to fill many of our retirement years doing something productive that not only entertains but also pays. One of my grandmothers was an accomplished artist and with time on her hands managed to produce numerous paintings that attracted buyers—they weren’t selling for millions but the extra funds helped cover the costs of occasional luxuries.
Taking the idea of working in retirement one step further, the idea of pushing back the national retirement age has been met with uproar in certain areas, but what’s the problem? We’re living longer these days so working longer doesn’t mean a shorter retirement: you could still find yourself with a good three decades of ‘free time’ even if you retire at 70.
I don’t know about you, but I get itchy feet if I don’t do anything for much more than a few days, let alone a third of a lifetime. And talk of 70-year-olds being too old to be able to do their job successfully seems overblown, not to mention ageist. My remaining grandmother is soon to become a nonagenarian (allegedly—no one’s known her exact age since she started celebrating her 30th on an annual basis around 59 years ago) and though she might not be able to outrun you, she’ll certainly outwit you. 20 years ago she could probably have done both, while whipping up some potato dauphinoise, knocking back a whisky, and completing the crossword in her head.
Times are changing, yes, but that’s because we’ve changed. To me it’s a logical next step that we update our pension system to cater for our updated lives.