How much do your clients really need?

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How much do your clients really need?

They mostly have all put some money aside into National Savings and Investments and are all mortgage-free. All their children (including yours truly) benefited from the grant scheme so there was no usurious student loan to pay off. 

But a rising cohort of people are entering their retirement age with mortgages still around their necks. They may have accrued loans or debts or given chunks of money to their children and grandchildren to help cover housing or educational costs. 

If they are blessed with long life, they will still need to make sure they have enough set aside to cover the cost of long-term care, of in-home care or nursing home fees, because the costs of this are rising exponentially.

Many cannot sell the home in order to do this, as they are torn between wanting to help their children out financially and catering for their own needs. 

This is not living. It is not even surviving.

So we see more people in their 60s and 70s starting to cut back, not on the superfluous expenses, but on the things that make life a little better: they are not buying clothes; not getting their hair done; not taking holidays; not buying their favourite food stuffs; and cutting back on heating and essential home maintenance.

We have read stories of how couples have been found dying in their home of starvation and hypothermia, cramped into one room to save on heating. This is not living. It is not even surviving. 

Rather than expecting people to simply grin and bear it and end up in an impoverished retirement, one where their four, bare walls close in on them, we need to be encouraging personal responsibility and making it easier for people to save more.

We must hammer home the message that the state will not always provide, and it might not provide enough even if it does. 

We need to save more. £30,000 is not a hard-and-fast rule for everyone, but it should be something we all help people to achieve while they are young enough to earn and save.

We need side-car schemes, better information and guidance from workplace schemes, greater flexibility in workplace pensions, higher contribution targets for auto-enrolmment pensions and a whole host of other, joined-up measures to help people accumulate enough to see them through their retirement. 

Nobody should cut back on necessities. If they do, it is a failure of individual responsibility, of the workplace, of advice, of pension provision and of the whole tax and policy framework around pensions. It is a failure on us all. 

Simoney Kyriakou is senior editor of FTAdviser