How much should I save for retirement? It’s a question that I and most personal finance journalists are asked frequently by readers, acquaintances and friends.
The truthful answer: I don’t know. In fact, no one currently does.
But I hope to be able to give a more helpful answer soon. That’s because the Government may finally make an announcement on social care funding next week.
Ageing population: For years, successive governments have put off making a decision on how we pay for social care
For years, successive governments have put off making a decision on how we pay for social care. Tackling the thorny issue of what individuals should pay and how much the State can absorb is a real challenge.
Should social care be funded by higher National Insurance contributions paid by workers or by extending the tax to pensioners?
Should individuals have to sell their homes to pay for their care or should the State step in before that becomes necessary?
Answers will only become more urgent as our population ages and the need for social care grows.
So yes, we need a good, fair strategy. But, finally committing to a plan is almost as important as the plan itself.
Once we know what the State will pay for, it will be much easier to plan for the shortfall.
We are told to be prudent and plan for our own retirement and older age.
But that’s pretty tricky if we don’t know what that entails. Of course, none of us know for certain what care we will need in later life.
But at least if we know what we would pay if we did need it, we can plan for that eventuality. With greater certainty the market may also step up to offer products that insure against a shortfall.
Tackling social care funding has been at the top of the Government’s to-do list for years. It’s time to finally tick it off.
Sad to see Andy Haldane leave Bank job
I’ll never forget watching former Bank of England chief economist Andy Haldane, right, chat with a bunch of school children about what an economist does. He had given a speech at an event and then hung back at the end to talk to audience members. He was open, animated and interested in their views.
On the move: Andy Haldane
I would regularly see him at events talking – and more importantly, listening – to students, pensioners, workers – people from all walks of life. He did a lot to counter the image of the Bank of England as a fusty, aloof and closed organisation. But, I’m sure that regularly speaking with ordinary, non-economists helped him in his work too. Central bankers are often accused of ‘group think’ – only speaking to people with a similar outlook and so failing to see a variety of perspectives. The impact can be catastrophic.
Huw Pill has just been announced as Haldane’s replacement. Oxford-educated and a Goldman Sachs alumnus, Pill fits a similar mould to many other Bank of England decision makers. That makes it even more essential that he too gets out from behind closed doors at Threadneedle Street, away from reading data and speaks to ordinary people like you and me, just as his predecessor did.
After all, it is we who are driving the economy. Inflation rises and falls in part on our sentiment; job creation hinges on whether we are feeling fearful or bold.
I’m sad to see Haldane go, but I hope the Bank of England carries on the conversation he started.
