How to get money each month when you stop working

I start a lot of my talks to school children like this. 

I present the idea of a regular sum of money coming to them each month even though they are no longer in full-time employment.

They can use this not just to pay the bills but also to do their own thing - holidays, visiting family, investing in their hobbies, setting up their own businesses, helping others, doing more voluntary work.

It's only when they get excited about the possibilities of having an income when they retire that I eventually call it what it is: a pension.

By this time, the youngsters are engaged and want to know how to get as much money as possible to enable them to enjoy their later life.

See if you can talk to people about pensions without using the word 'pension'.

Therefore, when I explain how they can save into a pension, and eventually come onto more technical things such as the tax advantages, compounding, drawdown or annuities, I'm talking to an audience that wants to listen.

It is Pensions Awareness week, and commentators have been filling my inbox with surveys and statistics about how terrible it is that people do not know what a pension is, or how they work.

For example, Royal London's latest research found a quarter of 18-24 year olds wrongly assumed that their pension contributions just sat in a bank account and didn’t know that they were being invested.

It's great to focus on getting young people and encouraging them to take charge of their financial futures now, but old people think the same thing, too.

There's a lack of education everywhere - and I think a lot of the problem is how we talk about pensions.

Basic knowledge of a complicated message

I recall how, 15 years ago, we had a church meeting about how our funds were invested. It became clear as the treasurer was desperately trying to explain ethical investment that only a few people realised the money didn't just sit in a bank. 

They genuinely believed that bank managers stuck all the money into a vault, and would simply give it back to you by jumping into this vast money-pit, like Scrooge McDuck with his dive-in cash pool.

(Perhaps that's how they thought ATMs worked - a duck spitting out bills with their ... bills. Sorry/not sorry.)

"I don't want my money gambled on the stock market", said one older person. 

So muggins here piped up: "Actually, banks put every bit of money deposited with them to work in the stock market or in loans. One way or another, the same £10 that you put in today could well be going into a loan or a bond or the market tomorrow. It's how money works.

"And if any of you have pensions from your work, all that money is invested into stock markets around the world."

Listening to some people claim that could not possibly be the case, because it is "illegal for banks to invest our money without telling us" was eye-opening.

It's not blind ignorance - it's education, or a lack of it. And how we 'educate' is as important as the message. As Canadian social philosopher Marshall McLuhan said, the medium is the message. 

Royal London's right in issuing a warning about basic knowledge.

But we must not assume that simply throwing facts at people (of any age) is going to be useful. 

A lot of it is about how we communicate. Think about the way in which "industry folk" speak. We say: "Let's talk about pensions" and immediately it sounds like it is going to be a snooze-fest.

Or we say: "Let's explain why having a pension is a good thing" or "This is how pensions work" to start conversations. 

Regardless of age, whether you are 18 or 80, the majority of people just aren't going to get breathless over that. 

But put it to them in other words - how about 'Here's how to get £450,000 when you hit 57'? Or 'What you can do today to have a great life when you're older'.

See if you can talk to people about pensions without using the word 'pension' - at least, not til the very end. 

'Money when I'm older' just seems to be a better attention-grabber than 'A pension when I retire'. More personal. More relatable.

The message is the same: the importance of saving now, tax-efficiently, regularly and mindfully so that you don't end up having to live like Croydon's famous Paper Jack when you're 60.

As Pension Awareness Week continues, let's think more carefully about the medium. 

Simoney Kyriakou is editor of FTAdviser