Rising State Pension Age : Work to 70 0r 75 ? -Andrew Oxlade

Documents published by the Office of Budget Responsibility show estimated future state pension ages. What will yours be?

A worst case scenario would see today's 20-year-olds working to 75 Photo: HOWARD McWILLIAM

Teenagers and those in their twenties have been given a hint of their eventual state pension age in an analysis conducted by the Office for Budget Responsibility (OBR).

The OBR, the Government's economic forecaster, underlined how rapidly the age may need to increase, to cope with the cost of an ageing population.

The state pension age is already rising but the ages are yet to be set in stone. Some proposed changes over the next few decades are waiting approval and beyond that the age will be linked to average anticipated lifespan.

What many people don't realise is that this could also affect the "private pension age", currently 55.

Current plans
The state pension age is currently 65 for men and 62 for women. The latter will keep steadily rising every few months and equalise at 65 for men and women in 2018. It will then increase every few months, reaching 66 by 2020. The next planned increase, towards age 67, will start in 2026 and conclude in 2028.
So anyone aged 59 or under will face a retirement age of between 65 and 66. Those under 53 will have to wait until age 66 at least. Finally, those 52 and under will take a pension no earlier than age 67.
Beyond that, the Labour government set a date of 2046 for the rise to 68 but the Coalition has set out plans, yet to be approved, to do this 10 years sooner.
The move to 69 will also be accelerated, probably to 2049, the Chancellor, George Osborne, announced in the Autumn Statement in December 2013. Previous predictions, put together for The Telegraph by pensions consultants Towers Watson, suggest those aged 47 and under will be affected.
The exact pace of the rises is yet to be passed as law. The Chancellor has said the payout should last “a third of adult life” (beginning from age 20), which could hold back future increases. At least ten years’ notice will be provided and changes will be phased in over two years each time.
The rate at which British life expectancy is rising has slowed. While there were sharp improvements in mortality in 2011, there was a lag in 2012 and early 2013. This is important, as the Government has said it will monitor life expectancy and make adjustments to the state pension age accordingly.
The latest state pension age prediction
The OBR said: "State pension costs will increase from 5.5pc of GDP in 2018-19 to 7.9pc of GDP in 2063-64 as the population ages. Spending is lower by the end of the projection than last year. The projection has been pushed higher by the updated population projections, but reduced by the Government’s policy of linking the state pension age (SPA) to longevity. We assume that this brings forward the rise in the SPA to 68 and introduces rises to 69 and 70 within the projection horizon."
The OBR published in its analysis, which is only to calculate the impact on Government finances, a fresh estimate based on three scenarios of life expectancy, worse than current predictions, central and better. If Britons become dramatically healthier and live longer, the state pension age could be 75 by 2064.

State pension age	Legislated	Best case	Central forecast	Worst case
66	2020	2020	2020	2020
67	2028	2028	2028	2028
68	2046*		2036	2031
69			2049	2034
70			2063	2037
71				2040
72				2045
73				2051
74				2057
75				2064

In January, The Telegraph asked pension consultants Tower Watson to estimate what the rises would be, based on a link with life expectancy (see table below). These estimates have not been proved correct by the OBR, and displaying it this way, with date of birth, makes it easier to look up your age.

Source: Towers Watson

When will today's children retire?
The state pension age should hit 70 by 2063 under current estimates, affecting those under 20. But then the age would keep rising. Pensions analysts at Hargreaves Lansdown have said children born in 2063 can expect a pension age of 74.
What will be your "private pension age"?
Private pensions and money in company schemes can be accessed from age 55. The biggest perk is that 25pc can be taken tax-free. Sweeping changes to the system were announced in the 2014 Budget, giving far better access to pension money. From next April, you will be able to withdraw all your money, although you will need to pay tax on it, as if it was income.
The plans also included a provision to increase the age of access from 55 to 57 in 2028. The exact date was not announced but it is likely to affect anyone aged 40 or younger.
What was less widely reported was that the Government also said it "was keen to hear views from respondents about whether the minimum pension age should rise further to allow more time for people to accumulate pension wealth before they reach retirement."
Guidance for this later retirement was even stated, suggesting the pension access age should be "five years below the state pension age instead of ten years".
For those aged 40 and under, facing a state pension age of 68, it would mean access to your pension pot is delayed until 63. The Telegraph understands the industry will tell the Treasury that such a plan would undermine the incentive to save but it could still plough ahead with the proposal anyway.

Culled from The Telegraph

Annuities are dead – this is how we will replace them -CAMPBELL FLEMING

Fund chief describes the new investment products that he will introduce to give retired people a better income

Retired people are about to have more choice about how to handle their pensions 

From next April there will be no need to buy an annuity when you retire. Instead, savers will be able to withdraw the money in their pension fund and use it as they please.

Many will keep the money invested and use it to pay an income – but without buying an annuity.

We don't know how many people will turn their backs on annuities but the evidence from my home country, Australia, where annuity purchase is voluntary, suggests that only 5pc of pensioners actually buy one. It's a similar story in the US. Annuities were designed at a time of high inflation and high interest rates, conditions that no longer apply.

So what could replace them?

The reforms present an opportunity for the fund management industry to innovate and create investment products that meet the needs of this new generation of retired people. Clearly, it's imperative that we help that ensure investors understand their options, as more freedom for investors means more responsibility for fund managers.

Fundamentally, the new freedoms will allow everyone with pension savings to remain in investments that are able to generate a decent return at a time when their pension pot is at its largest and is still in a good position to achieve some growth. Those with the largest pots will be most attracted to the idea of continuing to invest in shares or bonds in order to maintain growth of their assets. Individuals with pots of up to around £40,000 are likely to use a combination of cash (with the first 25pc taken out tax free) and annuities.
Where people choose not to buy an annuity, their pension savings will need to generate a significant investment return in order to see them through retirement. Companies such as mine will be entrusted with ensuring that elderly investors' assets are appropriately preserved and growth in excess of inflation is achieved, while also ensuring that enough income is available to live on.
This is a responsibility we take extremely seriously. Personally, I am a strong believer in diversifying your investment pot, seeking returns and income sources from an appropriately balanced range of assets. While it's important that investors take on some risk in order to grow their assets, the result of too much risk can be painful at times of market volatility.
I expect to see the market for multi-asset funds flourish, with products designed to provide various combinations of capital preservation, inflation-beating real returns and income generation. Competition among asset managers will increase, which can only be a good thing for the customer.
Individuals and the industry are still coming to terms with the long-term implications of the Government's pension reforms. I support change where it increases people's financial freedom, but asset managers will need to raise their game if we are going to make this work.
As an industry, we have a duty to participate in this debate to ensure people understand and have access to the investment solutions they need in the latter phase of their life. It's a journey, not a destination – investing does not stop at retirement any more.

Culled from The Telegraph

7 ways to retire happy

grandparents

When planning for retirement, most people fret over one basic question: How much money will I need to last until I die?

Some experts encourage us to save 10% of each paycheck and pray for the best. Others say we should aim to save eight times our ending salary. Many of us still obsess over hitting that elusive million-dollar mark, despite the fact that fewer than one-third of Americans have managed to cobble together $1,000 for retirement.
In a new book, “You Can Retire Sooner Than You Think,” Atlanta-based investment advisor Wes Moss, offers an alternative to the traditional line of thinking. Rather than focus on a dollar amount to reach for, Moss decided to figure out what retirees needed to be truly happy in retirement.
“I wanted to go beyond simple income numbers,” Moss says. “I wondered what it really takes to get somebody to a point where they truly feel they have a cushion and they are also enjoying life.”
In 2012, Moss conducted an online survey of more than 1,200 workers who had either already retired or were fewer than 10 years away from retirement. He asked them questions about what type of cars they drove, where they shopped, how much their homes were worth, and, of course, how much they had saved for retirement. But he also asked about their passion projects, how often they went on vacation, what types of volunteering they enjoyed, whether or not they were satisfied with their lives, and how much time they put into their retirement planning before calling it quits. (Moss did not ask participants about overall debt levels like student loans and credit cards, but did include questions about their mortgage debt).
What he found was that more money doesn’t equate to more happiness. The happiest retirees didn’t all drive BMWs or take 12 European cruises a year, either.
Here’s what it takes to be a happy retiree:
1. Retirees’ happiness hit a wall once they reach $500,000 in savings.

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Source: Wes Moss

The financial barrier separating an unhappy retiree from a happy retiree seemed to be right around the $500,000 mark, Moss found. In his research, happiness levels skyrocketed from retirees who had saved $100,000 and those with $500,000. But after hitting that half-million-dollar milestone, happiness levels plateaued even as net worth rose. The same plateau effect appeared when Moss asked retirees how much they spent each month.  On average, unhappy retirees spent less than $3,000 a month. Happiness increased by 25% between the unhappy group and those who said they were “moderately happy” and spent about $4,000 a month. But after that, there was only a 6% increase in happiness levels between moderately happy retirees and extremely happy retirees, who spent more than $4,500 a month.

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Source: Wes Moss

2. Happy retirees fill their time with three to four “core pursuits.”
Moss jokingly defines core pursuits as “hobbies on steroids”— the kinds of activities that fill retirees’ time when they are no longer working 9 to 5. On average, happy retirees participated in almost twice as many core pursuits than their unhappy counterparts — 3.6 vs. 1.9. Happy retirees were also more likely to pick core pursuits that were socially engaging, such as volunteering with nonprofits and sports.
3. Happy retirees pay off their mortgage early.
In his research, Moss found happy retirees were nearly four times more likely than unhappy retirees to be close to paying off their mortgage. More than one-third of happy retirees will have their mortgage paid off within eight years, compared to less than one-quarter of unhappy retirees. Nearly 30% of happy retirees said their mortgage payoff date is less than five years off, compared to just 5.6% of the unhappy sect. Any retiree who’s managed to pay off their mortgage debt should be thrilled — more seniors today are carrying mortgage debt in retirement than ever before.
“To me, this was kind of a real eye opener,” Moss says. “You hear all day long that there is no reason to pay off a mortgage early and you can make a great economic case for that. But my research shows the elimination of mortgage is really important, not just financially but also psychologically.”  Happy retirees weren’t all living in McMansions either — the average value of their homes was $355,000 – not far above the national average of $319,200. Unhappy retirees’ homes were worth $273,000 on average.
4. Happy retirees have at least two to three sources of income in retirement.

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Source: Wes Moss

On average, the happiest retirees reported having between two and three different source of income — the most commonly cited income sources were Social Security, investment income, real estate income, a pension, and part-time work — while unhappy retirees had between one and two. “I’m a huge believer in getting as many tributaries of income flowing into that main retirement income stream as possible,” Moss says.5. Happy retirees are “masters of the middle."

On average, happy retirees live off of just over $53,000 a year — not too far off the national household income of $51,000.
Moss also found that they aren’t overly interested in luxury brands. The unhappiest were more likely to drive a BMW, while happy retirees preferred Lexus. Moss calculated that over five years, owning a Lexus cost 16% less than a BMW. Happy retirees’ shopping tastes were also relatively modest, with the majority saying they preferred middle-of-the-road department stores, like Kohl's and Macy’s over Neiman Marcus or Saks. “They’re masters of the middle,” Moss says. “They aren’t super, uber frugal, but they aren’t shopping at thrift stores either.”
6. Happy retirees spent at least five hours a year planning for retirement.

Unsurprisingly, the happiest retirees were the ones who planned well for their golden years, spending at least five hours a year preparing. Nearly half (44%) of unhappy retirees said they weren’t satisfied with how much thought they put into retirement.  Five hours a year may not seem like much (Moss says most happy retirees spent more than that), but once you’ve set up a solid financial planning framework, the truly time-consuming part is basically over. From that point on, it’s all about checking in with your goals and maintaining your strategy. “Retirement planning is a long-term proposition,” Moss says. “It takes a couple of weekends a year to stay on track. You can gain a lot of grown by maintaining that garden.”

7. Happy retirees are more likely to be married.

As common as divorce is in the U.S. today, the overwhelming majority of happy retirees were married (76%) and only 9% were divorced. Less than half of unhappy retirees were married, while one-quarter were divorced, Moss found. This is right on par with what past research has shown about levels of satisfaction in married and unmarried people — over the long term, married couples are much happier. It’s fairly obvious why two may be better than one in this scenario — dual incomes can make a huge difference in a couple’s financial outlook. On the flip side, divorce not only reduces both parties’ income but is also expensive to go through. 

   Mandi Woodruff  (Yahoo Finance)
Culled from Yahoo Finance 

From doorman to board room -Elizabeth Garone

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Improvise your way to success…

Leading others? You’ll need to force yourself outside your comfort zone, says Fred Cook, chief executive officer of public relations firm GolinHarris. Cook knows a little something about that personal challenge. While he now heads a firm with about 50 offices worldwide, Cook’s previous jobs include: record executive, Italian faux leather salesman, junior high substitute teacher in an inner-city, cross-country tour guide, cabin boy on a Norwegian tanker and doorman at a four-star hotel.
An eclectic mix, yes. But the best time to take chances is early in your career, Cook said.
“When you reach the top, everything you say and do will be scrutinised by the press and the public,” said Cook, who recently penned Improvise: Unconventional Career Advice from an Unlikely CEO. “Luckily, on the way up, nobody pays much attention, which allows those of us who lack the standard business prerequisites to improvise.”
For Cook, savvy improvisation helped him land an early job as a tour guide. First, he crafted an interesting and intriguing resume which carefully reshaped his exploits “as a cabin boy, doorman and chauffeur,” he said. “I packed my suitcase with a dozen guidebooks about stops on our trip that I’d never visited. I discovered that with a little preparation and a lot of creativity, I could confidently lead people through unfamiliar territory.”
For Cook, improvising is about “creating something special from whatever ordinary ingredients happen to be available”.
This should be a mandatory business skill — no matter what the career stage. “When technology, economics, and politics change as often as Facebook profiles, being president of a company or a country is a lot like being a tour guide who doesn't know exactly where he’s going,” he offered. (Image credit: Fred Cook and Logan Futej)

Culled from Yahoo Celebrity

The five-year plan for the rest of your life

We all have goals. Perhaps it’s to buy your first home. Or to travel the world. Or to leave corporate life for your own company. Or to send a child to university abroad.
Some of these goals take decades of planning, but many can be managed within just five years. That’s right — with smart thinking and planning you can launch the next phase of your life in less than a decade. 

BBC Capital turned to Shelby George, practice leader of the benefits solutions group at Manning & Napier, and Katie Nixon, chief investment officer for wealth management at Northern Trust, for insights on what it takes to make your big goals a reality.
Among them: staying motivated as time drags on and cash runs low.
It’s never too late to start planning for the next big adventure. Start now. In five years, you’ll thank us.

Culled from BBC Capital