Middle aged ‘upbeat’ about being middle aged – but what about their pensions?
The BBC are covering a new survey today that finds that people now see middle-age starting much later than previously thought – 36 used to be the middle age cut-off. Today the magic number for being considered ‘middle-aged’ is 55.
The survey also found that adults in their 50s were ‘upbeat’ about the benefits of being in that age bracket, based on respondents saying they had more confidence than younger people and were less afraid of making mistakes.
Which got us thinking, whilst we’re sure that many 50+ year olds are quite happy with they’re aging status are they equally as confident that the money they’ve put aside to retire on is going to be enough to see them all the way to a ‘ripe age’?
After all the Bank of England themselves admitted back in August that the policy of money printing (quantitative easing) was specifically hurting pensioners:
However, the costs and benefits of QE were not evenly distributed. The group most damaged are employers with defined benefit pension schemes that were underfunded and heavily invested in riskier assets, such as equities and property, at the start of the financial crunch in 2007…
… Ros Altmann, director general of Saga, who has been a vocal critic of the adverse impact of QE, said that the latest paper does not address some aspects of stimulus that have been most damaging for older adults. In particular, she said, the fall in annuity rates has been much greater than any increase in asset prices.
“The fall in annuity rates since mid-2008 is over 24%. Cumulative inflation for older age groups has risen by over 20%. The FTSE is relatively unchanged and the average balanced pension fund has performed poorly, so that for people with defined contribution pensions, the impact of QE in reality has not been as the Bank of England is assuming,” Ms Altmann said.
So with the Federal Reserve in the US now admitting that never-ending money printing is now here, the Bank of England is probably not too far behind doing the same, so the trend of falling annuity rates is not going to change anytime soon in the UK.
So what can be done? Well, it’s probably worth mentioning that whilst the FTSE has remained relatively flat, annuities have fallen and inflation risen, as mentioned above, gold has out performed.
Back in mid-2008 the price of gold was around £450, today it is nearly £1100, a gain of just under 150% in 4 years.
Many people are now choosing to hold at least some portion of their pension in gold to protect themselves from falling annuity’s and a central bank hell bent on devaluing the currency at just about every opportunity they get, and this is something that is very easy to do, and more and more people are doing it.
People in the UK can purchase ‘approved’ types of gold through a SIPP / SSAS and gain up to 40% tax relief on their investment, which can be arranged either through their IFA or independently.
And for those who don’t like the idea of being clobbered with a big capital gains tax bill there are certain gold coins (Sovereigns) that are capital gains tax free.
We wonder how ‘upbeat’ those 50 somethings will remain if the BoE keeps printing money like it has promised to do chipping away at those hard earned nest-eggs?
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Link to this article: : http://www.goldmadesimplenews.com/analysis/middle-aged-upbeat-about-being-middle-aged-but-what-about-their-pensions-7954/