Sunday, December 02, 2012
Shock and horror. All older people are not rich
The good old IFS keeps producing great reports about the finances of UK households.
This document is about the lack of understanding most people have about their pensions and the chance that their savings will be able to fund their retirement.
Here are a few quotes:
The over-50s are underestimating how long they will live and are over-optimistic about how well off they will be in their retirement.
Those approaching retirement (aged 50 to 64) with a 'defined contribution' (DC) pension are too optimistic about what their retirement income will be. On average their DC pension pot would have to grow by 77%, or £20,200, to reach their expected income.
Of those aged 50 to 64, one in four would need to save more than £60,000 before retirement to attain the income they expect. And six out of 10 (59%) have never thought about how many years of retirement they might need to finance.
It is worth trying to understand the graphic. It shows the huge variation in household wealth of older people. The 'total family wealth' includes all wealth (i.e. the family home).
So we have the top 10% with wealth in excess of £1 million and the bottom 25% with wealth less than £170K.
The bottom 10% have zilch.
Next time you hear a politicians or policy maker wittering on with generalised statement about 'older people' and their wealth remember the range of these numbers. Dick Stroud