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Don’t worry about saving – do something

Alan SteelI may have mentioned previously that a survey carried out in the US by the Wall Street Journal found that the main reason for sleepless nights of Baby Boomers was money worries.

It found that almost half of those born just after the second World War can’t enjoy a decent night’s sleep worrying about  savings and income. (Changed days.  When I was younger, sleepless nights were due to something entirely different.)

But it seems things are even worse in the UK.  Research carried out on behalf of Scottish Widows discovered that 54% of oldies admitted their sleepless nights were down to financial problems too. You can take it from me that they weren’t all worrying about having too much!

The more you dig into “money surveys” the more you learn that it’s fast becoming an epidemic of financially induced mental health issues in the West. Consider these findings from the UK survey.

Half of the respondents admit that their financial worries are negatively impacting their relationships. Four out of ten conceded their own health was suffering thanks to financial concerns. Three out of ten of those now over 65 say they have no pension income other than the basic state pension.

According to figures in one Sunday paper last week the flat rate state pension is just under £160 a week. Try living well on that. No fun I’d imagine.

But despite all these worries and fears, unbelievably it’s still the case that 44% in the UK survey admitted they’re still not saving enough for a decent retirement. Oh dear.  But what does a decent retirement look like?

Assuming we start with the flat rate state pension mentioned above according to some experts you will need at least another £360,000 by age 68 in order to have a retirement income of around the current national average of £27,000 a year before tax.  And that doesn’t take into account future inflation. Even worse, I think you need more than that.

But if you don’t start doing something instead of lying around at night worrying about all this,  too many of us will slowly slip into poverty in later years.  But just worrying about it is very popular it seems.  

Three in ten say they get stressed just thinking about how they’ll cope financially after they retire.  22% say they worry they’ll not be able to enjoy “wee extras”.  And 50% say they don’t know what 50% means. (I just made the last one up to see if you were paying attention)

But despite this widespread worrying, the survey found that at least 10% of the over 50s who say they don’t save enough haven’t gone beyond the phase of just thinking about starting to stick more away into savings.  What a farce.

Last week I was talking to a friend who used to own long stay car parks around Glasgow Airport. He said that when he bought them 20 years ago the “season” for profits was eight weeks, thanks to the average family going on holiday once a year. By the time he sold out a couple of years back the “season” had stretched to eight months with families having as many as four foreign holidays a year.

Add to that replacing cars every couple of years,  two per household these days, plus satellite telly, iphones, ipads  etc and you can see a “live for today, plenty of time for saving” widespread mentality that leads you sleepwalking into a dismal retirement.

Despite living through the best ever 70 years of opportunity for savers the average end result for too many is shocking.  But could there be another reason why folks don’t invest properly?  Could they be unsure whom to trust?

Despite over 30 years of UK Investor Protection, we have seen reported year after year, countless scams and mis-selling scandals.  And there’s no let-up it seems with millions being ripped out of ordinary savers’ pension pots over the last couple of years by scammers the authorities can’t stop despite billions of pounds spent on protection. Pensions Freedom? Aye right.

To avoid the anguish suffered by a retired couple who came recently for advice only to discover their £300,000 plus pension pot is probably going to vanish thanks to being crammed with unregulated crap, give some thought to  what Google’s Chief Financial Officer Ruth Porat had to say about this.

She said: “Culture is more important than Rules and Regulations” US wealth manager Josh Brown added: “All the rules and regulations and disclaimers…… aren’t going to matter if people are determined to seek out loopholes…. examples of this are legion”

His conclusion is that culture wins every time. So take some common sense advice.  Take plenty of time as an investor, especially when it comes to pension plans to seek out those advisers who’ve been around a while and who are rewarded emotionally and financially for being totally on your side.  

And don’t take cold calls from anybody! That way you’ll cut out the stealth of the scammers and rogues, increase your wealth and happiness.  And be able to sleep at night.

Alan Steel is chairman of Alan Steel Asset Management

Alan Steel Asset Management is regulated by the Financial Conduct Authority. This article contains the personal views of Alan Steel and should not be construed as advice. Do check your individual circumstances with your advisers.

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