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Expat Investor : November 2008
STATISTICS AND ANALYSES have in retirement? AEGON surveyed over 2,000 people between the ages of 50 and 65 to gauge their attitudes towards retirement and to see what sort of financial provision they have in place. The study shows retirement in the ‘noughties’ is becoming a second adolescence, and is more likely to include flexible working or a new career, than a carriage clock and a pair of slippers. The survey reveals that 61% expect to carry on working in some capacity after they reach retirement age or pursue further education or charity work – and, for most, not because they have to. More than one in 10 (11%) said ‘love of the job’ made them want to stay in the work force while 14% argued that they were simply ‘too young’ to retire. Twelve per cent said they would like to try out a completely different career in their retirement. Thanks to exceptional social and economic factors, ‘baby boomers’ should be in a better position financially to enjoy retirement than any previous generation. In fact, 42% think they will be better off than their parents in retirement. However, the report highlights a significant knowledge gap when it comes to planning, as 42% of respondents have no clear idea about how much income they will have in retirement. 44% expected to receive an income less than £15,000 a year and only 14% thought their pension savings would produce more than £15,000 a year. Interestingly, 33% are relying on their pension alone, with no other savings or investments. While these figures wouldn't seem to indicate a comfortable retirement, 86% say they would at least “get by” financially if they were to stop working at retirement age, with only 14% saying they would struggle to cope financially. This may be because 47% of respondents don’t expect to have a mortgage or other outstanding debts at retirement. Perhaps understandably in these times of rising prices and falling stockmarkets, securing a guaranteed income during retirement is at the top of the wish list, with 87% of respondents saying this is most important to them. Running out of money is a concern for one in five people (22%) questioned. Rachel Vahey, Head of Pensions Development, says, “Retirement isn’t the abrupt cliff edge it once was and, for many of today’s ‘baby boomers’, retirement age marks a new and exciting chapter of their lives. But if you want to make adventurous life choices and have a more flexible approach to retirement you have to know what income you’re on track to receive and plan carefully. “Today’s retirees have to deal with the fact that people are living longer and stockmarkets are more volatile. Running out of money is a big fear factor and many people want the security of a guaranteed income. The good news is there are more products and solutions available now to complement people’s changing lifestyles. So making the right choices is more important than ever.” Good state school worth up to £50,000 Research conducted by YouGov on behalf of Fidelity International’s investment supermarket, FundsNetwork, suggests that 3.9 million parents would be willing to pay as much as £50,000 more for a home to become eligible for a good state school. While house prices are falling – Nationwide Building Society says the average price has dropped by 10% over the past year – private school fees have been rising faster than inflation, jumping 6.2% over the past year to an average of £11,000 per year. This has pushed private education beyond the reach of many parents. Rob Fisher, Head of UK Retail Marketing, Fidelity International says, “The prospect of putting a child through private school is financially very daunting for many parents, especially at time when the cost of living is rising so dramatically. While house prices in many parts of the UK are falling, a number of parents still find themselves in a situation where they have to spend more on their homes to guarantee getting their child into a good state school. Unless families prepare early and put money aside for their child's education, compromises will have to be made.” A third of parents (31%) said that the quality of schools in an area would play a big part in their decision to buy a house, and one in five said they would only actually buy a house if there were good schools in the area. Furthermore, one in five parents would be prepared to commute further to work and 12% would move away from friends and family if it meant that their home was close to a better school. As the average cost of private education exceeds £3,700 a term for day only, and the average cost for boarders totals more than £7,300 per term. Fidelity’s research has found that one in 10 parents with children up to 10 years old may have to reconsider sending their child to private school in the future. Parents who want to put their child through private schooling and university, will see the cost escalate even further – by as much as £300,000. Mr Fisher continues, “It’s more important than ever for parents to start saving as early as possible. Whilst private school fees are soaring, parents need not commit to saving huge sums each month, as long as they start early. Saving a small amount regularly is a sensible saving strategy, and investing as little as £50 a month can make a big difference when it comes to funding your child’s education.” Alliance & Leicester International of mind with Peace We’re backed by one of the world’s largest banks • Alliance & Leicester International is now part of the Santander Group, one of the 10 largest banks in the world bymarket capitalisation. • Santander has 70million customers and more branches worldwide than any other international bank. • Santander has a AA credit rating* Find out how you can make the most of your savings. Click www.alil.co.im *Credit rating as per Standard & Poor’s long-term issuer rating (domestic). Correct as at 17 September 2008. Alliance & Leicester International Limited. Registered Office: Alliance & Leicester House, 19/21 Prospect Hill, Douglas, Isle of Man, IM99 1RY, British Isles. Incorporated in the Isle of Man (No. 81918C). Alliance & Leicester is the registered trade mark of Alliance & Leicester plc. Telephone calls will be recorded for security, quality control and training purposes. Complaints we cannot settle can be referred to the Financial Services Ombudsman Scheme for the Isle of Man. Alliance & Leicester International Limited is a member of the Depositors’ Compensation Scheme as set out in the Compensation of Depositors Regulations 2008. Licensed by the Isle of Man Financial Supervision Commission to take deposits. Details correct as at 16 October 2008. EXPAT INV NOV 2008 Fast Facts 99002 November 2008 ? EXPAT INVESTOR 5