You need to understand the pension crisis!

This week we’re in doom and gloom mode once again! Last week it was risks, the previous week it was mistakes…and now we’re tackling the bright’n’breezy topic of being broke in retirement.

Yes, the pension crisis is real – more real than most people care to think about. But there is a positive message buried in there: by listening to this episode and not pushing it to the back of your mind, you’re in a great position to do something about it.

We cover:

  • Why auto-enrolment is like trying to fix a broken leg with a sticking plaster
  • The death of final salary pensions (there’s a good explanation here of what they are)
  • The ponzi scheme that is the state pension
  • The causes of the crisis…and why it’s not in anybody’s interest to educate people about it

And to throw some scary stats at you:

  • 60% of people will rely only on the state pension
  • 80% of people who bought annuities in 2013 had a total pension pot of less than £50,000
  • Only 4% had more than £125,000

In short, if you’re under 50 years old and you want to retire before you’re 80, you’ll need to do something dramatically different from what most people are doing.

Property is one solution (or part of a solution), but so is investing in anything – the problem is that people aren’t saving anything like enough. This retirement calculator dramatically shows how increasing your saving rate from 10% to 30% can cut 22 years off your retirement horizon!

And in case we didn’t scare you quite enough and you’d like some depressing (but important) reading on the subject, check out The Great Pensions Robbery by Alex Brummer.

A while back we mentioned brain.fm as a tool for boosting your concentration. This week Rob B has something more simple that he finds very effective: listening to the same track on repeat!

In the episode he talks more about why it works. He also recommends the Inception soundtrack on YouTube as good “focus” music.

As a bit of context for this week’s episode, the FTSE is in bear market territory and all private sector defined benefit pension schemes are set to cease within 12 months.

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