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Our financial future time bomb.

By Sally Tarbit 10 Mar 2010.
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A recent Lancet study predicted that the average British child born over the last couple of years could now expect to live to 103. This staggering stat amounts to more than a 30 year increase in life expectancy across most developed countries during the 20th century. Frightening or fantastic? In medical terms, its fantastic. But the day to day reality of the situation is less rosy. With even a marginal increase (after all, who wants to work forever...) in retirement age, it would still mean that there will be a lot of older people in retirement for a lot longer. The pressure this puts on the health service is one concern but just as pressing is how people will cope financially.  

We all know that the sooner we start preparing for our retirement the better – but early preparation is only as effective as the financial products, services and advice that exists. The need for financial flexibility and the ability of products to pay out, provide income or offer cover over a significantly longer period of time will be greater than ever. So has anybody started tackling this financial time bomb? In parts, yes. The emergence of enhanced annuities over the last few years at least suggests there’s a desire to drive a better deal that reflects reality, however brutal. But the market isn't yet flooded with the right solutions – not surprising as its not an easy challenge for the financial services industry to take on and solve successfully or quickly. And its an even harder challenge to get consumers (and ultimately their children) to actively plan the quality of their financial future; its uncomfortable, confusing, seemingly expensive and all too easy to avoid.

A recent Standard Life study revealed that up to two-thirds of 28 to 40-year-olds plan less than 15 years ahead when it comes to their finances. The gap is clear.  So its time for consumers and providers alike to bite the bullet and take control of the unknown. The winners will be the financial providers who bring a creatively fresh and intuitive approach to product development and communications, so making planning for a brighter financial future more palatable and importantly, attainable.