Gravy Train

The recent debt "crisis" in the USA has reminded me to add a post about things not to count on in your plan.

State pensions.

This may come as a complete surprise to those who have their heads buried in the sand, but warnings about the impending doom have been around for decades and you should consider state funded pensions as potential "gravy" in the plan, but do not assume that you will be able to retire in luxury on anything that the government will provide.

The core of the problem is longevity, when pension plans originated, some bright spark pitched the pension age around the point when the average person kicked the proverbial bucket, in addition, original ratio's of working people paying into the system to retired people was high (about 16:1) but all that has changed as the general population is healthier and live longer and the ratio of working to retired has shrunk dramatically.

So, the governments of the world are mobilizing to push retirement ages up, reduce benefits, destroy indexing and lastly, and of particular concern to all saving their own nest egg, means testing potential recipients.

Which typically, for those of you who are responsible enough to be looking after your retirement needs, means that the very schemes that you have paid into all these years may deem you too rich to be awarded any payout.

So, don't bank on any of it.