Demographic data shows that across the globe populations are ageing. The post-World War II ‘Baby boomer’ generation – is now entering or approaching retirement. In the UK, there are more than 22.7 million people aged 50 years and over, representing more than a third of the total UK population.
While they may appear to be entering retirement from a position of relative financial strength, the reality of the situation is far more challenging. The first priority for most people will be financing their own retirement with an income they can live off to replace their salaries. As people can now expect to live longer, they need to be sure their investments are suitable to provide for this. Further, many people will have an important second objective of preserving capital in order to bequeath their wealth to their dependents.
With interest rates unlikely to rise dramatically in the near future, income returns on assets such as government bonds and cash deposits remain at historic lows, and in many cases below the rate of inflation. Our view is that a focus on dividend-paying equities can offer investors the comfort of an attractive income stream in an otherwise low-return environment, and provide a shield against inflation.
Nick Clay – Newton, a BNY Mellon company
 Mid-2013 Population Estimates, UK Office for National Statistics, 2014