Surviving Retirement

 by: Ieuan Dolby

The financial security umbrella that most wage earners would like to shelter under after retirement is now leaking very badly indeed! Money savvy experts block up news channels and advertisement spaces with offers of transforming the average citizen into a healthy, wealthy and wise investor; advocates of ‘parting with your money’ do house calls alongside those selling vacuum cleaners and the sole ‘wanted’ letter fights for attention in the mail box amongst the hundreds of once-in-a lifetime offers of richness!

News these days is very negative regarding government pension schemes! They blame it on either too many old people one day, not enough young people the next! The answer we are told is “Go Private”!

Private pension funds are collapsing left right and center! Directors, Managers and Chairmen of companies tend as a rule to do one or more of three things with employee’s pension funds. They decide that the amount is too great to give back and so move to a remote island with no extradition treaty and eat caviar and drink champagne without moral conscience creeping in. Or they gamble the future of a failing company on money within the pension fund and (as always happens) the company collapses anyway! Or last but not least they listen to a door-to-door salesman who suggests that the proceeds are invested in some amazing opportunity that in actual fact turns out to be a big scam! So pension schemes and for that matter provident funds that are either controlled by the government or by the company that you work for are basically not worth a dime; unless a sieve be an attractive replacement for an umbrella!

There are other ways to go, other ways to invest money and to build up a “portfolio” of stocks and shares in a variety of companies that hopefully will provide high returns in the years to come. Naturally, an extremely large sum of money is required to invest initially which defeats most people but …….. start off small and buy one share and should the company not go bust, not file for bankruptcy, not use the pension fund to prop up falsified accounts, not be accused of insider dealings and not overstate earnings or be caught actually having no capital, reserves or ability to continue trading then it is quite possible that within a thousand years this one share might be worth something! Too many companies have recently collapsed taking with them thousands of shareholders dreams of not having to skimp and do without during retirement!

Property has always been heralded as one of the best investments available. And certainly many children saw their very own parents exclaiming over the profit they have made on a recent house sale (never mind the fact that they had to buy a new one at the same time)! A nice thought, a dream of dreams but in reality property prices have increased so dramatically that nobody can afford anything larger than a shoebox under the town bridge! Property has become an unaffordable luxury that now many people still invest in thus saddling themselves with a life-time mortgage that eats incomes dry, that prohibit investments elsewhere due to lack of excess funds and that produces many retired people with roofs over their heads but without the finances to turn on the lights! Oh, and of course it is impossible for property prices to keep on going up! Nobody ever talks about possibility, but face the simple fact that people cannot afford to buy houses anymore! That bubble will burst and any savvy investor should take heed before falling into the tangled property web!

Gold is of course an attractive option! Not only does it have value but it also looks nice and impresses friends but ……..too many problems are associated with this metal. When the time comes to sell the price maybe way down; actual appreciation is not a definite possibility and storage is a constant hassle. Storage boxes in banks are not cheap and the money used for rental would be best invested elsewhere. Under the bed is not the safest or most secure of places, especially when friends are ‘shown the hoard’ after a drunken night on the town!

In reality there are only a limited number of ways for the average wage earner to invest money for the future! One way is to choose a couple of Investment Trusts - more than one just incase one of these institutes happens to go bust! These are companies that work with ‘small’ people’s money by spreading risk over a variety of businesses that trade on a stock exchange of one nation or another! The other advantage of these companies is that the government tends to be favorable towards them and so tax incentives and reductions often apply!

One could of course invest heavily on horse racing or into a casino in Las Vegas but gambling has never really provided long term returns. Lottery tickets and scratch cards remain an ever hopeful means to an end but, dream on!

Let’s not live under false pretences. Be brutal and face the fact that unless one has lots of money, the chance of getting lots of money is well ……. best left unsaid! For example: 2000 pounds worth of bonds purchased from the Post Office (National Savings - hahaha) yields 2475 pounds after five years of care. Now in anybodies calculations even after twenty years in servitude that amount is not going to keep the ‘cat in the bag or the ‘pigeons in the coop’ (whatever best describes the situation)! The security of investments even in the most secure of environments is not secure and the property bubble might explode at any moment, oh and should you be winning the government will ruin it all by charging stamp duty or VAT, inheritance tax, capital gains tax or just tax to reduce the final amount to what you first started with and plus a penny for luck!

What is the answer?

One supermarket recently had on offer tins of baked bean; buy twelve and get one free! Another chain decided to offload hundreds of packets of pasta: spend a hundred and get a delightful packet of pasta twists for free. And another had loads of; two for the price of one items around the store! The answer is to buy these products, as much as one can get hold of and store them for the future. Dig holes underground, fill cellars and attic’s with non-perishable goods and so when retirement days sneak up unexpectedly you may not have the money to go out but at least you will not go hungry!

Well, not quite a suitable answer but then options are very limited for those without a penny to spare! Selling oneself as a matured sex slave to some North Korean General will probably not appeal to many and suicide at the age of 67 (after having spent the 1,347 pounds saved over the last forty years of hard work) is more difficult to achieve than previously planned for.

In fact the only real answer is to move out of the country, to buy a small property in the south of France, in Romania or Spain where prices are half if not a quarter of those in the UK, where the value of life is far better and where the air is clean. One pound will go a lot further so ………….. Maybe this is the only way!