Forget three score years and ten. We are all living longer. And the extent of it was recently confirmed by official figures. They show that by 2031 women will expect four score years and five. And men are catching up. By then they will be less than four years behind women, expecting a life of four score years and one. Every decade that passes, life expectancy creeps up by two years.
That has led to concerns about how people approaching retirement will fund this longer life. Especially with stock markets falling and pension funds in crisis. But new research suggests that far from being on their uppers, people approaching retirement today are better off than their parents’ generation was when it retired. And aim to stay that way with small debts and big assets.
The report, by the International Longevity Centre and the Future Foundation, suggests people in their fifties are approaching retirement with more money than ever. It found that the average wealth of a 55-64 year old is £130,000 – including the value of their home but on top of anything in their pension fund.
One reason is the growing value of property – which the report calls "a wealth accumulation mechanism". A staggering 85 per cent of people aged 50 to 54 now own their own home. Although some of those still have a mortgage, by the time they reach 60 most of them have paid off that loan and look forward to being mortgage free in retirement.
The average assets – apart from a home and a pension fund – for people aged 65 were around £40,000. And by that time debt had fallen to a few hundred pounds. Compare that to people in their 20s where debts and savings were each around £5000.
Of course not everyone approaching retirement has plenty of money. And many who have retired are very hard up. But the research found that although people in their fifties are in a golden generation, even up to 75 there are considerable assets among many UK households.
The report, which is based on a sample of 11,000 people, concludes "Our findings show that there is a significant degree of life-stage financial planning taking place in the UK. Perhaps more than many people, and certainly the doom-mongers, had appreciated."
The price of credit
Banks have been accused of a "slow" and "inadequate" response to demands
from a powerful committee of MPs to sort out the confusion over what they charge
their customers. We reported in Saga in December that Barclays boss Matt Barrett
said he didn’t borrow on credit cards "because it’s too expensive". Following
the meeting the Treasury Select Committee demanded action on confusing interest
rates saying that consumers had been "badly let down" by a "lack of
transparency". It accused them of "excessive interest rates" which could leave
users "sleep-walking into disaster."
One problem is the methods used to calculate interest rates and how those rates are turned into monthly repayments. The report found there are two ways to work out the Annual Percentage Rate or APR which every lender must quote and which is supposed to provide one common way to compare interest rates. It also confirmed research by Consumers’ Association that there are then ten different ways to apply that rate to work out the monthly repayment. A single purchase of £300 on a card that charges interest at 18.9 per cent can lead to a monthly charge ranging from £5.50 to £9.54.
Egg, owned by the insurance giant Prudential, commissioned a Cambridge University mathematician to dig deeper into the problem. Dr Robert Hunt came up with a formula to calculate the actual rate of interest.
Three months later, the chairman of the committee, John McFall, has written to the top five credit card providers asking them "to seek genuine solutions" rather than "create obfuscation". He also warned that to "do the minimum necessary would not be acceptable to either the Committee or consumers".
His letter came in the week that Barclays revealed the profits from its Barclaycard division were £722 million – in other words it made around £68 from each of the 10.6 million Barclaycard customers. No wonder Mr Barrett warns his children not to use one.
Euro warning
If you are going to Europe this summer, it might be as well to take smaller
value euro notes after reports that a growing number of retailers are refusing
to take €100 (£66) banknotes following reports that many are faked. The European
Central Bank, which issues euro notes, says the problem is being exaggerated. It
admits that in 2003 it seized more than half a million fake euro notes worth
€27.5 million (£18.4 million), though only one in ten was for €100. But the Bank
stresses the fakes are a tiny proportion of the nine billion genuine euro notes
in circulation – about one in 20,000. Retailers, though, are not so sure.
Already most shops and restaurants refuse to take €200 and €500 notes. And now
signs saying ‘€100 notes not accepted here’ are more common. It is reported that
more than 55,000 retailers in Holland and Germany always refuse them. That is
despite the evidence from the Bank that it is the €50 euro note which accounts
for more than half the fakes seized – by number and by value.
The ECB issues guidance on how to examine a euro banknote to see if it is authentic – feel it to test the paper and the raised print on the front; look at it to check the watermark and security thread; tilt it to watch the hologram on the front change and the iridescent stripe on the back shine. More at www.euro.ecb.int
Late Life Raider
We all hate banks from time to time but one 92 year old American decided to
take drastic action. Hunter Rountree, known as ‘Red’, embarked on a series of
bank robberies after his once successful business, Rountree Machinery of Houston
Texas, collapsed. He blamed his bank, though others have blamed his marriage to
a 31-year-old on whom he is reported to have spent $500,000. He is now divorced.
Rountree was first caught in 1998 after robbing a local bank in Biloxi, Missouri. Given probation and told to leave the State, he went to Florida where he robbed Nations Bank in Pensacola. After a three year prison sentence he went back to Texas and it was not long before he called on the First American Bank in Abilene where he handed a cashier an envelope on which he had written ROBBERY in red ink and then another telling her to fill it with $100 notes. He made off with nearly $2000 but a customer took down the number of his car and he was arrested within 20 minutes.
In January he was sentenced to 12 years in jail, which for a 92 year old is probably a life sentence. Now often in a wheelchair, Rountree is passing his sentence in a hospital unit where he says the food is better than in a nursing home. He has said that if released early he probably would rob another bank. He needs the money. And he hates them.
Art on the up
"You can quite easily get quite a decent drawing or watercolour for a few
hundred pounds in good condition even if the artist is a bit obscure". Henry
Wemyss has been Director of British Watercolours at the London auction house
Sotheby’s. There is not an auctioneer in the land who will tell you to buy
pictures – or anything else – as an investment. But the price of the pictures
that Henry talks of has risen strongly over the last year. The Zurich Art &
Antiques Index shows the price of English watercolours up by nearly a third, 32
per cent, in 2003. That is a faster than UK shares – nearly 14 per cent – and
much more fun to hang on the wall.
Beginners may be afraid of buying paintings. But Henry Wemyss says judging quality is simple. "When you look at a watercolour imagine the physical action that goes into it – the confidence to approach a blank sheet of paper with a very wet brush with some coloured water on it. You can see the speed of execution, the lightness of touch. Great fluidity and speed means you are looking at a good artist." And at every sale, however grand, there are people like Henry happy to talk to you about the pictures – you just have to ask.
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David Cox (1783-1859), watercolour, Pont-y-pair, nr Bettwys-y-coed, North Wales. Sotheby's 26 March 2004 estimate £1500-£2000. |
You should choose pictures that are in good condition and always buy things you would like to live with in your home. If you do then make a profit from them, that is a bonus. But with auction houses charging both buyer and seller – usually at least 15 per cent each – and dealers marking up what they sell by up to 50 per cent you need to show a big gain on your object before you make money.
You also have to look after your watercolours. Make sure they are framed in acid-free card and materials otherwise they may start browning after a few years. Glaze them with non-reflective glass that cuts out 99 per cent of the damaging ultra violet rays. Even so you should hang them on a wall away from windows and definitely not in direct sunlight.
Sotheby’s holds cheaper sales at Olympia and Christie’s has its cheaper South Kensington auction rooms. Abbott & Holder is a London dealer with a huge stock of watercolours at reasonable prices.
Sotheby’s Olympia, Hammersmith Road, London W14 8UX
Christie’s South Kensington, 85 Old Brompton Road, London SW7 3LD
Abbot & Holder 30 Museum Street London WC1A 1LH
April 2004
e-mail Paul Lewis on paul@paullewis.co.uk