Centenarians will need big nest eggs

Do you think you’ll ever be able to afford to retire? In last week’s Queen’s Speech, plans were outlined to link the state pension age to longevity, after increasing it to 67 by 2028.

In figures out today, beancounters at PricewaterhouseCoopers reckon the pension age will have to rise to 68 by 2031. And looking further ahead, they calculate that children born today will be 77 before they qualify for their state pension. That could mean 60 years of graft ahead for today’s newborns.

On the other hand, the latest projections from the Office for National Statistics shows that a third of babies born this year will live to celebrate their 100th birthday.

In other words, they’ll work for much longer, and they’ll also have many more years of retirement. That is, if they have the cash to do so.

And that’s what all these projections are all about. They’re hoping to scare us into taking responsibility for our own financial futures, by saving more into a pension and planning ahead.

You’ll hear a lot more about the issue as the year progresses and a new forced workplace pension scheme — known as auto-enrolment — is introduced.

But think about the issue in a different way. If you have cash when you get older it will give you choices. A pension is just a savings scheme. But it’s one that will give you choices, and for that reason its a nest egg that’s worth building up.