We might just be working forever...


We might never retire – 5 reasons why we could be stuck working forever!

There used to be a time that when people retired at 65, they would then enjoy many years of golf and grandchildren funded by a consistent income from their state pensions. However back in reality of 2016, that dream is extremely far away.

Here are some (horrifying!) reasons why everyone, including freelancers, will be working forever!

1) Insufficient retirement savings
56% of Britons are now saving towards retirement, which has actually risen to the highest since 2008/2009. However, the truth is UK consumers still aren’t sure how much their retirement will cost them.

21% of those in the UK who are able to save aren’t, theoretically leaving them open to a lower standard of living in their retirement years.   It seems that after the recession people have put pensions and other similar savings schemes at the very bottom of the list of things to use their money for.

Let’s just say for a moment that you can save up enough money for your retirement, you might have some unexpected costs that can spring up and ruin any well laid plans.  What happens if you get become sick and the care you need is costly? How about if there is a financial crisis that reduces the value of your savings?  Or perhaps you have some unpaid debts you never thought you would have?

You could be one of the luckier ones and have the perfect retirement but for most, retirement is dead.

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2) Reducing income
It has been reported that by 2020, low and middle income households will be poorer than they were in 2008. Incomes for the lowest groups are set to fall by up to 15% by the end of the decade despite any growth to the UK economy in the next coming years.

These statistics give an extremely bleak outlook for our standard of living in the next decade, if we fail to challenge and change our economy. These statistics also suggest that millions of families are going to struggle to progress and raise their incomes. It’s a frightening outlook and even more frightening is the fact this is all based on optimistic assumptions about growth in the economy, including the number of people in employment steadily rising.

3) Increasing life expectancy = Reduction of state pension
As you may have read over and over in the past few years, life expectancy has increased significantly in the UK over the last three decades. These improvements in life expectancy can be down to several reasons from lifestyle to improvement to healthcare. As fantastic as that is, increased life expectancy also poses significant challenges to individuals, to employers and even to the Government. The more individuals who live longer should in theory have longer retirements to save for and support.

The Government is keen to encourage people to work longer in order to combat the potential financial problems both for the individual and for the state posed by a declining birth rate and increases in longevity.

4) Declining investment returns
Investment performances has varied, for example last year, Prudential grew its main fund by nearly 19% while Legal & General’s rose by 14%. In contrast, Aviva managed only 6.6% growth and Standard Life 6.2%. Equitable boosted its policy values by 5.5%. But the important thing to focus on is that most of these insurers continued to cut maturity payouts on with-profits investments, continuing a long-term decline.

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5) Increasing child care expenses
The cost of a part-time nursery place for a child under two has increased by an inflation-busting 33% according to new research by the Family and Childcare Trust. A family paying for this type of care now spends £1,533 more this year than they did in 2010, while wages have remained largely static.

Parents on lower incomes receive significant amounts of support towards the costs through the childcare element of working tax credit and housing benefit. This means that they pay a very low percentage of their childcare costs from their own pockets. While childcare support will reduce under universal credit for the least well off families, they will continue to receive more support towards the costs of childcare than better off parents. Parents whose income puts them outside the tax credit system receive less support with the costs of childcare. Beyond the free entitlement for three- and four-year-olds, they largely pay for childcare out of pocket and, therefore, spend a greater share of their disposable income on childcare than a lower income family.