Ask, Check, Challenge & Act ... and then never give up.
Generation-X...Are you tuned in?
This is something I have been wanting to write for some time. This is not a personal story, although it is 'our story' at home, because we are Gen-X'ers too. The conditions I will discuss do apply to me at home, and we have taken action.
There is a sector of 'Generation-X' that I really want to appeal to, because I need your help. I would really like to start a quiet revolution that could make great changes for people's futures and change the way things really work today. This said, if when you read on, you are not in the target group – please don’t stop reading! Please feel free to react, and comment and add to the debate, (please like, dislike, and comment in anyway).
If you are 'Generation-X', born roughly between 1965 and 1980, (let's not quibble about the precise dates here, because this is a generalisation), and you are female and married, (ie the Fm) then this is really targeted at you. If you are not in this precise group, I suggest the issues are still important to consider.
I would like to see if we can make your future financial life better, and ask you to take control, and beat a likely unfairness that has been the result of our life and times. The simple fact is that during our lifetimes there is a good chance that a pot of money has been growing, and growing, that you have a very strong interest in, but it is simply not yours.
Despite the fact that in a marriage commonly all assets are shared, (I am not a lawyer so challenges accepted), there is one asset that stays firmly under the control and ownership of the person named at the top of the paper. This is also an asset that by law is not allowed to be transferred between husband and wife, unless they get divorced, or indeed the 'owner' dies. This is in spite of the fact that both parties in the relationship will need this asset to live off in the future, and at some stage just one person is likely to survive, and would be really annoyed to find that it had gone elsewhere, or nothing was left.
Perhaps the tragedy of our generation is that this asset is generally ignored. The owner knows it is there, and because it is not very exciting it rarely sees the light of day. It can mean that when the container is finally opened, the owner realises that if they had taken a look a few years before, and a little more often, then things might have been so much better than they actually turn out to be.
With some care and attention, the future could be bright, or at least far brighter than it is today, but most owners just don't care and tend to brush it away as something far too boring, and something that gets in the way of today. But then pots of money you can only look at until you are a bit older are generally not very exciting are they – so there it lies, generally ignored.
Now the reality is that "the average pension pot for a 65 year old woman in the U.K. is £35,800, just 1/5th of the average 65 year old man's". That make’s the man’s average pension pot £179,000 in case you were wondering. (source noted below)
The reality is for many Gen-X married couples, that the pension asset is sitting in the Male life, and is probably being ignored. There is so much that can be done in the years before retirement that can make you better off in retirement. As a Gen-X’er you do have time to sort this out!
For example, did you know that today you can have £25,000 of tax free income in a household with two adults, by both using your £12,500 income tax allowance? Yet in retirement the chances are that the Male will pay tax, maybe even higher rate tax, because the pension is in his name - and it cannot be transferred. (One way to address this will be to consider switching future savings into the Female life. You need to think this through, and may need to take guidance or advice. It is what we do in our house.)
In my view pensions should be like any other asset in marriage, and transferrable without tax, but the fact is that they are not, so you have to take action as early as possible to make the most of the rules.
There are 4 simple steps that I ask Gen-X Fm to do please:
1. ASK - what pensions have 'we' got?
2. CHECK - where they are & how much they are worth? What happens if either of you die? Where are they invested? (I suspect few people know.)
3. CHALLENGE - Are we saving the right way? What fees are we paying?
4. ACT - Pull all the info together, make some plans, and take some action, because chances are no one else will!
And then a 5th Step...
5. Never Give Up...The fact is that pensions are boring, and people who have them typically don’t look after them, (sweeping statement I know, but in my experience that is the way it is), so in a house made of two – The Pensions you both have need to be considered together and the more you plan the better the chances are of your ‘Next Stage’ of life being that much more fun.
If you need any tips, you can always make contact with us, (although we cannot advise), and also think about Pension Wise, which is a free service from the Government; or you could find a retirement adviser, because many are offering a free 30 minute session via zoom at the moment. There are also new online journey's you could try like destination retirement, which I quite like, and they have helplines too. (Please note I get no fees for recommending any of these, and other sources of help are available).
I have read through many sources before writing this, and particularly grateful to the CII for their paper called 'Solving Women's Pension Deficit to Improve Retirement for All', written by Jane Portas, which does provide a huge amount of information to 'the Industry' and is the source of my data.
In my view, 'the Industry' is not going to change anything fast - because they cannot just move the money that men own, It needs Gen-X Fm to Ask – Check – Challenge & Act, and start a quiet revolution, by never giving up.
Keep smiling – The Next Stage can be great.
Steve