It’s death. Thanks to Freud we know this.
No matter what scares us, death-fear is at the root of it. Take the fear of public speaking. What if I stutter, screw up and make a fool of myself in front of people? My belief in myself as a respect-worthy person (i.e., my “ego”), might explode into a million pieces …. Ergo, a form of death.
But back to the question at hand this week, pensions. How do I figure out what I need to do about mine and then take the necessary steps to avoid the poverty line in old age?
This isn’t an unreasonable fear. A few years ago I stumbled across a terrible fact which became one of the catalysts for Counting Zeros: more than 50% of women in the United States are likely to die at or near the poverty line. While there’s plenty of variation in the statistics, they all agree — women are poorer than men and women fare particularly badly in old age. The reasons for this? Here’s a few.
Why did I worry? Because by burying my head in the sand I knew I was refusing to do the one thing that might protect my financial future: planning for it! Nine months into Counting Zeros, has anything changed?
While, the idea of surviving without being in paid employment remains profoundly foreign to me and I struggle to significantly reduce what I spend today to save for a long-off tomorrow, I am getting my head around how to think about pensions.
I’ve come to the conclusion that I only have two choices. To hope for the best or to create a plan and then hope for the best. The latter seems more sensible.
Creating the plan …
- Show me the money. What’s the current status of my pension funds? Relatively speaking, are these numbers healthy or horrendous? A few years ago finding the answer to this would’ve led me down a dark alley of non-filed paperwork and stressful realisations that I’ve no idea where anything is. These days, everything’s online. I even tracked down the Future Pension Centre where I got the balance on my state pension. The verdict? Apparently I’m not doing so bad for my age. More on this in Step 3.
- Do the math. I consulted pension calculators like these. Ballpark figures are all I need. But a year ago I wouldn’t have been able to fill in most of the blanks. Between the spend tracker and the central dashboard of data I’ve created this year I can answer plenty of things about my personal finances. Knowledge is power.
- Get professional help. Not only because finances aren’t my thing, but because almost everyone currently living above the poverty line has more options than we think. Financial experts can help us both question our assumptions about what we want and need and bring us up-to-date about solutions we’ve never heard of (e.g., the lifetime mortgage). So after hunting around all year, I’ve found someone I trust. Someone who can break out of the accountant mindset for long enough to listen to what’s important to me. He’s the one who told me that my current pension isn’t looking half bad.
- Live Well and Have Dreams. Planning for my pension brings me back to the question that keeps rearing its head. What exactly do I want money to do for me? What sort of life am I trying to finance? I’d save £9,000 each year if I didn’t rent out my flat and lived there instead. I work a 4-day week in order to have time to write — that day costs me 20% of my annual salary. Similarly, decisions about my pension will involve the psychological math, not the solution with the fattest figures. And in terms of having dreams, mine is that there’ll be no need to retire at all. Like Dickens at his desk, I shall live out my days doing what I love most. Writing. As Gloria Steinmen said “Dreaming, after all is a form of planning.”