Thirty is the new forty
I was at a 30th birthday party of a friend recently, a very enjoyable evening altogether. During the festivities I started up a conversation with this very glamorous lady seated near me. The subject of our jobs came up and we chatted easily, she was a receptionist in a care home and enjoyed her job immensely.
When I said I worked in the pensions industry I expected a cool response (it's usually a conversation killer!). Instead, she smiled and proudly proclaimed that she and her friends had made the ‘grown up’ decision when they turned 40 the previous year and all had started a pension plan – “the only positive to come out of turning 40.'' She beamed at me, obviously waiting for the required praise at this wise decision. I didn’t let her down and told her that it was excellent news and that she was obviously a very intelligent lady.
She went on to tell me that she had great plans for retirement which involved a lot of sunshine and partying once she turned 65 and that she was now putting away 5 per cent of all her earnings for this. I smiled politely and nodded throughout. Probably taking this as approval she asked me if I thought she would have enough for her plans. I did something I would never normally do; I gave her a definitive response without even seeing the figures, I said no. She looked crestfallen and asked how that was possible; after all she would be saving for 25 years.
I asked her one simple question : "If you saved 5 per cent of your salary for 25 years and got that 5 per cent back each year during you retirement would it be enough for your dream retirement?”
"Of course not,'' was the reply. She looked confused but before she could query this more she got sidelined by friends and happily went off to dance when cajoled.
I didn’t see her again until it was time to leave. She was chatting with the birthday girl when I stopped to say goodnight to them. She proceeded to tell the birthday girl that the best piece of advice she could give her, having chatted to me earlier, was for her to start a pension now, at 30. She declared loudly “I’ve decided that when it comes to this retirement lark, 30 is the new 40!”
Kristen Foran is Regional Sales Director of Zurich Life Assurance plc. This is the opinion of the author, and should not be construed as financial or investment advice.