Retirement income
Discussion
drainbrain said:
TooMany2cvs said:
Perhaps they could have waited until they were financially secure before having kids.
Sadly people on minimum wage don't really get to 'financially secure' which is why there's a current push for 'living wage' which is a bit higher.It ranges between £6 and £20.45/hour.
http://www.resolutionfoundation.org/app/uploads/20...
p6/7
Trexthedinosaur said:
And for those who can only just manage to scrape by on minimum wage?
Where will this 5% come from? A pay rise? Who will fund that? The cost of the service / product goes up and then we all have to find the extra 5% ...
People need to be taught, in school, the importance of financial responsibility and not go out and finance a Tag, white Audi and 55'' TV over 7 years.
No payrise. 5% of earnings go into a pension,Where will this 5% come from? A pay rise? Who will fund that? The cost of the service / product goes up and then we all have to find the extra 5% ...
People need to be taught, in school, the importance of financial responsibility and not go out and finance a Tag, white Audi and 55'' TV over 7 years.
Deal with it.
drainbrain said:
Tit For Tat said:
No payrise. 5% of earnings go into a pension,
Deal with it.
To be invested in what? By whom? To be used when? Heritable? Deal with it.
Conceptually it could work quite well, but the investment parameters would be very narrow GILTs, USTs and AAA rated debt - so struggle to produce (or exceed) private sector pensions.
Such an approach would or could help get the UK off the crack of monetary policy towards a fiscal stance where the SWF makes infrastructure investments in U.K. Plc. It would need complete political ringfencing and a new accountability structure.
For the vast majority saving in a low risk product is the best option for retirement. Placing the savings in a tax efficient wrapper is an incentive to do so - but it's still incumbent on those saving to understand their risk profile and place funds according. Crying about poor performance when you are invested in BRICs and Emerging Eastern European Pig Farms etc is a nonsense. And likewise those people unable to understand that investment income is to represent risk really shouldn't be allowed to do BTL, equities, wine, cars or any other asset class either. The majority with non diversified portfolios in these products will end up wards of the state.
And anyone with a company or matched contributions scheme invested by a third party would be mad not to be in a pension scheme.
Tit For Tat said:
TooMany2cvs said:
It's all about priorities. You have a certain income, what do you choose to do with it?
Priorities is the key.There is a new TV series on Ch4 starting soon I believe, about couples who managed to retire in their 40's.
Not through being mega wealthy, but saving 50-75% of their total income through careful budgeting and saving. So no doubt many sacrifices made, but their priority was to retire early, so they found the money to do it.
While I appreciate that young people don't always have a lot of disposable, what it needs is compulsory contributions to pensions from age 18 or age of starting work. Make it 5%, and then they can't spend it on beer, it's never part of their disposable income like tax and NI.
I'd like to know what sort of house they bought and what furnishings they bought for it. What about children, what is their salary and work situation, do they pay to commute, how much was their wedding etc etc.
Suppose you could buy a caravan and live in that for life but let's face it if the average salary is £28k and the average house price is £180k then the sums to allow someone to work 20 years while paying off a mortgage, paying for life and having enough left over to fund another 30-40 years of life isn't really going to happen.
Have you had a look at Mr Money Moustache? www.mrmoneymustache.com
Edited by drainbrain on Saturday 8th July 13:38
Grandad Gaz said:
That's because they have things like Sky packages, new cars on finance, going out to eat, holidays, etc. Not a lot left over to save!
Having said that, a lot more people are in part time work only these days.
I've heard the argument before that "having an iPhone isn't the reason that I can't save for a house.Having said that, a lot more people are in part time work only these days.
The right respond it that this may be true, but having an iPhone, and an iPad, a car, a couple of foreign trips a year, meals out, drinks out, coffee out, shop-bought sandwiches, steak, a big television, taking taxis and "treating yourself" to other nice things is precisely the reason that many people don't ever get a house, build up an emergency fund, and save for a decent pension.
drainbrain said:
You don't think it's just that after paying for all the basics and essentials and just the teensiest bit of luxury to make it all bearable, Mr Average merely doesn't have much more than fifty quid a month for future gratification?
It's the slipperiness of that bit of luxury that catches people, as per my reply above.Some people are spending that fifty pounds a month while having no savings at all, then hitting disaster if they have a month off work, or their boiler needs to be repaired.
That's fine, it's their money and their choice, but if you spend the money when young then you can't also spend it when you are old, and you can expect to end up a bit hungry and a bit cold.
drainbrain said:
Tit For Tat said:
No payrise. 5% of earnings go into a pension,
Deal with it.
To be invested in what? By whom? To be used when? Heritable? Deal with it.
By whom? Pension providers.
To be used at retirement age
Heritable ? Possibly yes. Could be run under current personal pension/SIPP rules.
Point is, young people will hardly ever contribute to a pension unless forced to, because retirement seems so far away. But its the best time to invest, the earlier the better.
My first job I was fortunate to belong to a mandatory employers pension scheme, to which the grand total of 1% of salary was deducted (obviously employers contributions made up the bulk of it). I remember b
hing at the time that I wasn't allowed to opt out ,as I really resented that 1% being deducted. I would have spent it very easily. I was a member of the scheme for around 7 years. I recently transferred the resultant fund into a SIPP. It was worth 80K.
How grateful was I for that pension, which I would otherwise have spunked up the wall on beer and cars.
Trexthedinosaur said:
PositronicRay said:
Once your mortgage is out of the way you can stash the surplus in your pot. Although rates have been low, that's been my strategy a great feeling once the mortgage is gone.
I reckon day to day, running the house 2 cheapish cars, 3 or 4 holidays a year £25-30k
And that is what you have worked your whole life for ... ??? to scrimp and save on £25k?! I reckon day to day, running the house 2 cheapish cars, 3 or 4 holidays a year £25-30k
Not for me, sell up, take the biggest tax free lump sum and off I go, plan is to contract 6 months (55-65) and live away 6 months experiencing the world, ensure the daft cars are paid off and enjoy myself until its all gone.
No point having 30-40k a year coming in post 75, my partners grandparents are 85ish now, haven't been able to travel for the past 7-10 years due to ill health and too tiring, three of mine have passed away (67 / 73 / 86) and one is going strong at circa 84 but starting to slow down.
For us a rough monthly budget
£1k Household/cars
£1k Entertainment/clothes/meals out
£500 Holidays
Moving house to somewhere more rural this month will eat an extra £130k from the pot by the time we're finished. What to do with spare cash is something that concerns me. Maybe care home fees in 25yrs, meanwhile it's nice to be living well within our means.
Tit For Tat said:
Trexthedinosaur said:
My grandparents were all extremely active, until they died. You see pensioners in the gym, etc, are they the minority or majority? A colleague died this year (43), a colleagues wife died (mid 30's) and another colleagues child has some god awful cancer, my partners cousin died this year at 34-7 ...they would also be the minority ...
I could die tomorrow or at 99, obviously it is not comparable but as I have no other group to compare to, what else can you do?
80 will never be 50, maybe 68-70, 70, late 50's early 60's.
A lot of people make the mistake of estimating their life expectancy based on the age of death of their parents/grandparents.I could die tomorrow or at 99, obviously it is not comparable but as I have no other group to compare to, what else can you do?
80 will never be 50, maybe 68-70, 70, late 50's early 60's.
Medically speaking, this is bull. While genes will have some impact, they are far from definitive, and will not necessarily prevent anyone from developing a fatal disease that their parents did not.
I'd like to know what the basis is for the understanding that average and below earners are failing to invest for retirement because of their overwhelming prioritisation of instant gratification over future ?
In my experience, whilst undoubtedly some individuals are far better budgeters, planners and money handlers than others, many - indeed most - average or below wage earners are just managing to get by and keep their heads above water. With some not even managing to do that.
Hefting serious money into retirement planning is, for them, just a dream.
So what tells anyone otherwise?
In my experience, whilst undoubtedly some individuals are far better budgeters, planners and money handlers than others, many - indeed most - average or below wage earners are just managing to get by and keep their heads above water. With some not even managing to do that.
Hefting serious money into retirement planning is, for them, just a dream.
So what tells anyone otherwise?
James_B said:
Just observations, the statistics, and anecdotes.
You can see for yourself what people view as normal in terms of the non-necessities, and we know how little is being saved.
There are some people who genuinely can't save, but there are clearly also plenty who choose not to.
And, in your opinion, is this because they are deliberately choosing an impoverished retirement, or because they are too stupid to realise its inevitability?You can see for yourself what people view as normal in terms of the non-necessities, and we know how little is being saved.
There are some people who genuinely can't save, but there are clearly also plenty who choose not to.
drainbrain said:
And, in your opinion, is this because they are deliberately choosing an impoverished retirement, or because they are too stupid to realise its inevitability?
To be frank, most are too stupid.OK that sounds harsh. Perhaps better phrased as they are putting their heads in the sand, and hoping/assuming the state will look after them.
Tit For Tat said:
To be frank, most are too stupid.
OK that sounds harsh. Perhaps better phrased as they are putting their heads in the sand, and hoping/assuming the state will look after them.
You don't think there's quite a lot of publicity and TV programming these days relating to retirement income and the pitfalls of failing to assure it? And assuming they actually watch these big plasma TVs they're all spending their money on they must be so stupid they don't understand what's being discussed.OK that sounds harsh. Perhaps better phrased as they are putting their heads in the sand, and hoping/assuming the state will look after them.
I don't think that opinion is frankness or harsh. I think it's a misunderstanding of how thinly spread average (and below) wages are just to catch the necessities and essentials and emergencies and a TINY bit of luxury aka non-essentiality.
At the lower end they see survival in retirement based mainly on state funding (inc the state pension) as an inevitability of never having much to save at all.
Fortunately it isn't that cut and dried and a number of other features may and often do enhance their retirement situation. But ladling chunky percentages of lower end wages into investment products isn't a realistic option.
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