The above seems to have become a cliché for people who have retired or been made redundant where their pension income is inadequate. For someone who has had a highly skilled position, having to take a part-time unskilled job to make ends meet can be humiliating at best or worrying at worst. Income when we cease work, can come from pension benefits which will provide an income or from capital or assets which will generate an income. Examples of the former include pensions you have earned in employment or taken out yourself while in self-employment, while the latter could include buy-to-let properties, the value of your business or an investment portfolio. To be able to have a “pension” i.e. an income you get without having to work, does not always mean having a pension scheme or policy – other assets which can generate an income can serve just as well. By far the most common problem with people at retirement age is that the fund or value of assets that could generate an income, is way too small.
The average Prudential pension plan when it matures is between £40,000 and £50,000 which for a male aged 65 will yield a level annuity of between £3,700 and £3,300 a year depending on where you buy the annuity from. Amazingly, 46 per cent of people did not know that you could shop around for the best annuity rate, something called the Open Market Option in a recent survey of 800 people by insurer Skandia Life. A level pension annuity is fine for a while but not good if inflation takes off again. If you want escalating annuity income of say, 2.5 per cent a year, the starting annuity income amount will drop to between £2,814 and £2,883 a year which will take over 10 years to catch up the level income figure and longer than that if you allow for inflation as well.
To repeat what seems to becoming my mantra here, there is no point in having a small pension as per my earlier blog http://www.georgeemsden.co.uk/?p=17 which has a link to a pension calculator.
As an antidote to the Beast of Pensions, last Sunday was spent at Harley Street at a Beauty event organised by a lady Masons Lodge. Thinking I might learn a little about lady masonry, instead I find myself at a whole day seminar on the latest beauty treatments where I am the token male apart from three male doctors. Subjects included the latest fillers which are not permanent as these are safer apparently but of course need to be “topped up” after 6, 8 or 12 months. Demos were being done on a couch while the next speaker was doing their presentation. Apart from one which involved infra-red treatment delivered by what could have a been a three head razor, the fillers – first one side, then the other – were administered by injection into the cheeks in several places without any anaesthetic and and without any sign of discomfort. Sometimes blood was drawn, but this was calmly wiped away by the nurse and the needle was stuck in somewhere else. There was no shortage of volunteers for this stuff either.
Most popular, was a talk on detecting breast cancer with themography instead of mammograms.
The latter did not come out very well in the comparison. Their detection error rate seems to be about 30 per cent, each mammogram increases the chances of getting cancer by about one per cent, the nodes that are detected are relatively large by the time they are picked up and the whole process involves compression which can be very uncomfortable.
For avoiding cancer generally and staying healthy, more general advice included: eating raw or steamed brassicas e.g. cauliflower & broccoli (boiled is OK if you drink the water); cancers love sugar and the best place for a microwave is…….in the skip.
Last but by no means least, my hosts very kindly sat me next to the lady Grand Master. Having been under the impression that lady masonry was a product of women’s lib, it was a surprise to learn that lady masons have been around since Edwardian times with the first UK lodge in 1913. Now there are 14 lodges in London, 3 in the Isle of Man, a new one in Gibraltar and other countries too.
STOP PRESS: in2 Consulting has just published a client newsletter Financial Focus with articles on: Offshore investing, changes in PEP and ISA rules, estate planning, student debt and investor protection. If you would like a complimentary copy, please e-mail me and I will send it to you as a .pdf file.