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Daily Mail
19-07-2025
- Business
- Daily Mail
Time is money when it comes to pensions, says L&G boss António Simões
Albert Einstein may not have said it but, as Warren Buffett has often repeated and proven, compounding interest is the eighth wonder of the world. It's why it's so important that pensions reform has been plucked from the too difficult box and placed firmly on the agenda. To get Britain growing, we need to rewire the financial system to boost investment while making people's hard-earned savings work harder. 'Patient' pensions capital is central to this ambition - increasingly well understood as a national economic lever that can catalyse growth, deepen capital markets, and support financial stability. Australia's £2trillion pension pool has helped power domestic investment, and shield its economy from global shocks. But when it comes to building our personal pension pots, patience is a misnomer. The challenge of pensions adequacy – making sure all of us have enough to live on in later life - is urgent and pressing. Adequacy depends on three things: 1. when people start saving; 2. how much is being put into the pot, and 3. what returns they get. We have heard a lot about the last one and, at L&G, our Private Markets Access Fund is helping more people access the potential high returns available through investments in private markets. In addition, our default Lifetime Advantage Fund already has up to 15 per cent invested in these assets. But the other two are critical. Starting early makes all the difference and whilst time is a simple, potent lever, it is often the most neglected. Under the current system, the average person would be 15 per cent better off when they retire if they started saving at 18 instead of 22. The problem is that advice to save early rarely lands. It's hard to imagine yourself as a retiree when you're only just starting out in working life. But if you create the habit - it sticks. This is where Government can help by lowering the auto-enrolment age from 22 to 18. The powers already exist and countries like Australia and Canada have shown it's possible. How much goes into your pot is also crucial. Automatic enrolment brought millions into the system, but minimum contribution levels are still set too low and need to be gradually increased. The second phase of the Government's pensions review is the right moment to act on these two areas. It would be a win-win. Those at retirement would be in a stronger financial position, less reliant on the state. And when more people save, more capital is available for the UK economy, supporting jobs, infrastructure, and national resilience. Bigger pension pots could be channelled into productive investment, helping to fund growth and regeneration. And retirees would have more to spend. This matters, given that consumer spending drives 60 to 63 per cent of UK GDP and retirees already account for a quarter of that total. The best financial gift we can give young people is time. A pension opened at 18 may not seem much now, but in 30 or 40 years, it could mean everything. So, let's stop wasting time. Let's start saving it.
Yahoo
13-07-2025
- Business
- Yahoo
One Major Money Item Most People Are Missing Could Spell Disaster
While many people may be getting smarter with their money, investing earlier and taking advantage of compounding interest, the vast majority have no plans for the inevitable. A new study from Western & Southern Financial Group shows that only 25% of the over 1,000 people surveyed had created or recently updated a will. Learn More: Find Out: Not having a will or other testamentary document can leave your loved ones not only emotionally devastated, but also financially. According to the new survey, only 1 in 4 respondents had created or recently updated a will. When broken down by generation, baby boomers were the most prepared for the inevitable. Almost half (47%) of baby boomers surveyed reported having a will, compared to 23% of millennials and 20% of Gen Z. The study also found that 38% of those surveyed had not taken any steps to prepare financially for their own death or the death of a loved one. Not only had most respondents not taken any steps to document their afterlife wishes, but 30% had not had the conversation with their loved ones. While preparing for post-life has become easier, many people report not wanting to have the conversation in the first place. Over half (54%) of those surveyed reported not having end-of-life discussions because they found the topic uncomfortable, and 34% stated they didn't know where to start. While many people found the conversations challenging, the reality is that not being prepared can have devastating consequences during an already difficult time. Many people do not realize the financial challenges that they could face after the death of a loved one, particularly if it is sudden. When surveyed, 51% said they struggled financially after their loved one died. Funeral and burial costs, along with the loss of the deceased's income, were the top two unexpected financial obstacles people faced. The U.S. Federal Trade Commission also noted that loved ones may be responsible for a deceased person's debts under specific scenarios, including if they cosigned a loan with the decedent or were the spouse in a community property state. Wills or other testamentary documents, such as trusts, can prove critical for loved ones. Dying without a will or intestate means that your assets will be distributed according to your state's laws. The distribution may or may not be in accordance with what you would have wanted. Without legal documents defining your intentions, the state will decide, as explained by the American Bar Association. In addition to defining how assets will be distributed, a will can also ensure that debts or other obligations are settled and can minimize tax implications. Importantly for parents of minor children, a will can prescribe who will have guardianship if both parents or guardians are deceased. Today, preparing and executing a will is easier than ever. In many cases, it can be completed online; however, state law may require that the document be witnessed and notarized to be valid. Due to the complexities involved in ensuring the validity of a will, working with a legal expert often proves critical. Some estate planning lawyers offer à la carte services, which help to keep the price more affordable. Since laws vary from state to state, it is recommended that individuals consult a lawyer local to their area when discussing end-of-life planning. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 7 Things You'll Be Happy You Downsized in Retirement The New Retirement Problem Boomers Are Facing This article originally appeared on One Major Money Item Most People Are Missing Could Spell Disaster Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
