If you are coming up to retirement you cannot avoid the dire warnings of the industry about how poor and even destitute you will be. It puts fear and trembling into most people and leads retirees to not spending enough and going without when they don't need to.
The industry needs to lose its obsession with hoarding capital and chasing yield when it comes to retirement. Long terms goals need to shorten and advisers should have sensible conversations with their clients about how they should spend income AND capital.
We all get earache from the shouty messages about accumulation; not saving enough, starting to save too late, saving for the long term etc and yet where are the messages about 'spending money safely' a term couched by leading pensions' expert Alan Higham @alanhigham ? Research conducted in the US showed that the majority of retirees only felt 'safe' if 50% of their assets were untouched and this did not change with age.
The days when people automatically died broke by buying a guaranteed lifetime income (annuity) seem to have gone. Merryn Somerset Webb, editor-in-chief of MoneyWeek, has announced that she will give the company that first comes up with the strapline " Let US help YOU die broke" an honourable mention in her column.
I do hope that someone takes up the challenge!
At a meeting of fund managers and wealth managers a few weeks ago, I said that I thought the priority of wealth managers looking after pension savings — the ones who really care about their clients, anyway — should be to make sure that most of their clients die close to broke. It didn’t go down that well. . That’s because most managers — and their clients — see capital and income as two entirely different things. Capital is not for spending — even in retirement. Income (in the form of dividends, and so on) is the thing for spending. As far as the industry sees it, a good manager’s responsibility is primarily to make sure that his clients die with roughly the same amount of capital in their accounts as they had when they first signed up.