As the Baby Boomer generation reaches retirement age, the UK – as with other nations – faces major demographic, economic and social challenges as its largest age cohort ceases work (a mixture of suddenly and gradually) to begin drawing on pension pots and other benefits accrued during their working life.
According to population projections, over 12 million Britons will reach retirement age by 2030, with rising numbers entering retirement each year: surging from the current figure of 700,000 to 750,000 per year in 2020, to 850,000 in 2030.
As a result, the number of people over the age of 65 is forecast to increase by over 33% to 14.6 million by 2030. This, coupled with comparatively slow population growth of 10% (69 million) by 2030 and increasing life expectancy, the UK will see a noticeable rise in the ratio of people in retirement age to total population, from the current 17% to 21%.
Thus, in less than two decades one in five Britons will be over the age of 65.
This demographic shift poses important challenges for the institutions and arrangements currently in place to provide for old-age income, healthcare and support. In fact, the sustainability of many such schemes, both publicly and privately managed appear to be in question and could lead to a curtailment of benefits in the future.
On an individual level this demographic transformation will put to the test the retirement provisions of many baby boomers, who might find themselves in a very different situation to the one they had initially planned for.
In this context, the recent financial crisis and the double dip recession that followed have put further pressure on people’s finances and raised further questions about the suitability of the retirement arrangements of those retiring in the coming years.
Moreover, increased uncertainty has caused widespread risk aversion among British investors, and coupled with historic low-yields on safe assets and volatility in equity markets, it has seriously dented the returns of pension portfolios.
A new CoreData Research report (Beyond Retirement) uses primary data to assess the level of risk appetite of Baby Boomer investors and models the level of returns they can expect to achieve on their pension portfolio given current and historical market conditions.
It suggests that with current levels of wealth, the rate of savings and the investment approach adopted, many Baby Boomers will fall short of their income goals in retirement.
A call for action is needed.
Not only do future retirees need to increase their level of savings, but they need to overcome their fear of taking even the most low levels of risk and overhauling their investment strategies by moving away from traditional portfolios and non-yielding safe assets to consistent risk-adjusted products… even after retirement.
Investment advisers and product providers have a key role to play, by offering their clients a clear and honest picture of their situation, presenting them with an adequate investment strategy and providing them with products suited to their needs.
This will certainly be a challenge, but it can also prove to be a great opportunity as investors are driven to seek higher returns, not only in the years prior to their retirement date, but beyond. hairy girls займ на 10 днейвзять займ в манимензайм 10000 на 3 месяца