Fears that fake news distorts the integrity of retirement advice and concerns that even the Bank of England does not feel economic forecasts are trustworthy are worrying for everyone – especially retirement savers.
How you feel about the reliability of what you hear affects the financial decisions you must make and making mistakes based on false information can have a huge detrimental impact on how much you have in the bank for your later years.
If you are a President or Prime Minister, you have the luxury of future generations picking up the tab, but as an individual, that’s not an option.
Here are some of the ‘fake news’ assumptions savers rely on for not putting enough money aside,
- I won’t spend as much when I retire – Maybe, but saving work expenses means swapping them with higher day to day living costs so retirement may not cost that much less.
The best way to find out is to track actual spending to identify what you might save.
But just because the mortgage is paid doesn’t mean the cash is saved as you should budget for eating out, travel and entertainment.
- I will live until the age of 83 – Another maybe. No one knows how long they will live and taking the average means putting yourself in the 50% who die on time while forgetting an equal number live much longer or the figure would not be an average.
- Investments will make up my income – High returns are based on long-term stock performance and taking risks. Retirees do not have the time to reap those benefits and tend to shelter cash in safer investments. The real investment return is more likely to be 3% rather than 10%.
Add inflation and a portfolio can only sustain real-term low income drawings every year.
- Budget for long-term care – Two-thirds of over 65s will need some care as they age and as councils cut their spending, paying for effective care must come from the retiree’s pot of cash. Care is expensive and will quickly deplete reserves.
The bottom line here is financial advisers and service providers with a vested interest in scooping fees in return for advice bombard seniors with information and advice.
Under this barrage of fake news, determining who is reliable and trustworthy is a major task.
