A lot has changed in Britain in the past five decades. Our focus here will be on the major financial problems which were nonexistent 50 years ago. These problems include; identity theft, insufficient pensions, and high household debt. For every financial problem, we have compared past and present situations. We’ve also gone further to advise consumers keen on protecting themselves or dealing with the financial problems in question.
Back in 1965, state pension stood at £4 per week against a weekly average wage of £20. However, the average cost of living was way lower. The cost of housing/accommodation was significantly lower. Since the 1980s, state pensions haven’t been able to match wage increases. As a result, they have lost their value.
It is not until 2016 that UK state pensions experienced major changes the most notable being on entitlement. Since April 2016, UK workers must have made National Insurance contributions to qualify for state pension. Workers who have less than a decade worth of contributions don’t receive anything. Other notable changes include; women aren’t able to claim their husband’s contributions automatically.
According to recent statistics, 63% of people who reached state pension age in the year 2016-2017 weren’t entitled to full state pension.
So, how do you prepare for retirement? The pension auto-enrolment scheme introduced in October 2012 guaranteed a state pension top-up for younger workers. However, what happens to workers aged between 40 and 59 years old who aren’t entitled to full benefits? How should they plan for retirement?
The first/most important thing to note is – there is no bad time to begin saving for retirement. If you have already paid your mortgage, you can direct the money you would pay your mortgage provider to your retirement fund. Alternatively, you can defer your pension up until you attain state retirement age. Every year you continue working, you will be entitled to a 5.8 percent increase in your pension. You could also consider making Class 3 voluntary contributions to close any gaps present in your employment record. It’s important to prepare a post-retirement budget characterised by lower living standards just to determine how much further your savings can go.
According to Cifas, a not-for-profit fraud prevention agency in the UK, 90% of fraud cases in the UK in 2016 happened online. 50 years ago, there was no internet. Impersonating someone for purposes of defrauding them was riskier for criminals because they had to avail themselves physically at financial institutions and risk arrest.
Identity theft is a major problem today because of the significant advancements in technology that have happened and continue to happen. According to Cifas statistics, there were over 173,000 identity theft cases reported to the agency in 2016 alone. Most of these cases involved fraudsters posing as other people to buy products or take out payday loans among other types of short-term loans. The methods used by identity theft criminals today include; stealing mail, computer hacking, buying personal information on the dark web as well as exploiting information which is accidentally or unintentionally revealed on social networking sites.
To prevent your identity from being stolen, you must secure your post. It’s also recommendable to shred documents like utility bills and bank statements before disposing them. When using the internet, visit secure sites only and use strong passwords containing many different random keyboard characters. You should also change your password often. Lastly, be careful about the information you share on social media and who your friends/followers are online.
There have always been households in the UK facing financial problems especially, making ends meet. However, lack of access to online payday loans 50 years ago meant there was less temptation to accumulate short-term loan debt. The cost of living in the past was also lower given crucial costs like accommodation took up only 10 to 12% of household wages.
Today, housing is a significant cost taking up to 33% or more of the average household wages. According to a July 2017 report by the BOE, consumer credit stands at £7,436 for every household.
The key to cutting household debt is to re-work household budgets with the aim of reducing expenditure. If household debt is a problem for you, it is recommendable to identify priority and non-priority expenses. You can seek free professional help from many UK debt advisory services.