MANAGING expectations was a skill I honed at a young age, what with growing up supporting both Cardiff City and the Welsh rugby team.
Avoiding disappointment by assuming the worst may seem pessimistic but, as football fans north of the Border know well enough, it’s a very effective psychological safety net. It’s also an approach I recommend to anyone with more than 30 years to retirement and still expecting to retire in their 60s.
The chances are that unless you save diligently throughout your working life and plan ahead, you’ll be lucky to retire at all. I gave up on the idea of retirement years ago, which is where that stuff about managing expectations comes in.
The shocked response to the Autumn Statement “revelation” that anyone in their 20s will be at least 70 by the time they get their state pension was as predictable as it was misguided (it’s worth noting that 70 was the age at which the state pension could be claimed when it was first introduced in 1909, meaning only a minority lived to receive it).
If the state pension is to rise with longevity – as proposed in the Pensions Bill – today’s children will be working well into their 80s.
It’s a depressing thought in many ways. But is it any more so than the fact that around half of people already over 50 will have to work into their 70s to avoid financial hardship in retirement, as the Pensions Policy Institute has warned?
The fear is that as the state pension is paid out later we’ll develop into a society of two halves, with some fortunate enough to retire when they like and the remainder working until they drop. Again, however, that is already happening and it’s nothing to do with the state pension age.
The number of Scots working past their pension age is rising rapidly, not only because the state payment isn’t enough on its own, but because of low private savings and a pension system that badly needs an upgrade.
Much-needed reform has begun in the form of automatic enrolment, through which millions of people will over the coming years be saving into workplace pensions for the first time. That must be followed by a radical overhaul of the choices that savers have at retirement, so people saving know they’ll be rewarded for it later on.
The government wants us to take responsibility, which is reasonable. Yet the state also has a responsibility: those able to save need a system in which they can do so with confidence, while a safety net must be maintained for those less fortunate. Unfortunately, however, the government is doing too little to hold up its end of the deal.