Retirement income

[James_B]

I don't agree. People have plenty of years to save, they are just choosing not to do so.

[Grandad Gaz]

James_B said:

I don't agree. People have plenty of years to save, they are just choosing not to do so.

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.

[Tit For Tat]

Successive governments have attacked pensions with the dividends tax, limits on contributions, limits on life time allowances etc. Expect the next short sighted attack to be the removal of higher rate tax relief.

Bearing in mind the increasing cost of state pensions, surely government should be encouraging people to be more self sufficient, not penalising them.

[anonymous-user]

jonny70 said:

Trexthedinosaur said:

And that is what you have worked your whole life for ... ??? to scrimp and save on £25k?!

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.

Being in ur mid to late 20's , u do realise u can't equate the lifestyle of someone who is 80 now to ur own retirement in 40-50 years .

Not only are people living longer but people are 'getting younger ' too (ex people that are in their 60's look better and younger and are more active than people in their 60's a generation ago ) as life expectancy increases and medical improvements 80 could become the new 50 in a few decades time. As I said people are getting younger and age is no longer a barrier or a limit to do anything especially if one looks after themselves ex I see lots of pensioners out running or in the gym.

Edited by jonny70 on Wednesday 5th July 23:57

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.

[Tit For Tat]

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.

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.

[drainbrain]

James_B said:

I don't agree. People have plenty of years to save, they are just choosing not to do so.

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?

[TooMany2cvs]

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?

Like they said...

red_slr said:

Too many of my friends (we are late 30s) have no pension and no savings to speak of. They do however live nice lifestyles so its a trade off for them, work till they drop but live well or live a bit more frugally and retire well.

...and...

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!

It's all about priorities. You have a certain income, what do you choose to do with it?

[Tit For Tat]

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.

[anonymous-user]

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.

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.

[drainbrain]

Well if the article in the op is to be believed it looks as if people are taking £10k a year (plus £8k? state pension) from their investments etc.

So if £10k needs investments of £200k+ to produce, that's really not too bad, is it?

I'd have thought it would be quite a struggle for people on average or below average wages to assemble an investment pot of £200k.

[ashleyman]

Lets say you start saving to your pension at 20 and save for 40 years to retire at 60.

Save £100 a month for 40 years = £48,000 which as far as I'm aware just isn't enough.

You'd need to be saving close to £420 a month to get a pot of £200,000.

I don't know many people who have that much free after all the essentials. So instead of putting it aside they put it into 'stupid' stuff like phones, cars, holidays etc... Stuff they can enjoy now.

[drainbrain]

ashleyman said:

You'd need to be saving close to £420 a month to get a pot of £200,000.

Well not really because unless your investments were as useless as mine they do tend to grow a bit beyond the continuous contribution.

But I'm not convinced that average and below average earners are avoiding responsible retirement investment by substituting excessive and unnecessary consumer spending for it.

[covmutley]

You are forgetting the power of compound interest. Einsteins 8th wonder of the world.

Saving £420 a month over 40 years should create a pot of about £800k, possibly more if history repeats

[TooMany2cvs]

Trexthedinosaur said:

And for those who can only just manage to scrape by on minimum wage?

A couple, each working 40hrs week on minimum wage, are earning £28k/year or £2,300/mo... AFTER income tax.

Trexthedinosaur said:

Where will this 5% come from?

5% of that is £115/mo between them.

Edited by TooMany2cvs on Friday 7th July 18:27

[mjb1]

ashleyman said:

If I'm honest I have no idea what I'm going to do when I retire in 30+ years.

I'm 27, have never had a pension cos I've always worked for rubbish companies who never offered them. Then when it became compulsory I was self employed. I haven't got round to sorting one out for me yet and if I'm honest I don't see the point, it's not like anyone can top it up except me/my company and as my company doesn't 'earn' enough to top it up I can't get the tax benefits each year.

I'm desperately trying to scrimp a house deposit together but it's never ending, just as I catch up, something happens like in 2015 when I had to take 9 months off work and ate into 75% of my savings just to stay off the street.

The wife works for a local school (council pension) but I'm not sure what she pays in or what they do with it. If I had a property that was all paid up and the state pension of £18,000 I'd probably be able to get by. The fact I don't have a property is the scary bit as I need to get that sorted out asap otherwise I'll be paying a mortgage right up until I'm properly old.

It's kinda scary as I'm beginning to feel old and I've got no real plan.

Edited by ashleyman on Wednesday 5th July 23:02

You're only 27, still time to make it up to something worthwhile. I'm 10 years older than you, and I started pension savings with a SIPP about a couple of years ago. I was just dribbling in £100 per month, and leaving it there in cash (til I had time to do some research and make some investment fund choices). I've recently upped my monthly contributions to £300. But I ran some projections through a spreadsheet, and as I calculated it, your pension pot very roughly doubles for every 10 years you pay into it. So start 10 years earlier, and it's worth twice as much at the end (or retire 10 years later).

What I'm saying is, I wish I'd started 10 years earlier. If you leave it another 10 years, you'll probably be thinking the same!

[Sheepshanks]

TooMany2cvs said:

Trexthedinosaur said:

And for those who can only just manage to scrape by on minimum wage?

A couple, each working 40hrs week on minimum wage, are earning £28k/year or £2,300/mo... AFTER income tax.

Trexthedinosaur said:

Where will this 5% come from?

5% of that is £115/mo between them.

If they've got kids it's probably not worth them both working.

[ashleyman]

drainbrain said:

ashleyman said:

You'd need to be saving close to £420 a month to get a pot of £200,000.

Well not really because unless your investments were as useless as mine they do tend to grow a bit beyond the continuous contribution.

But I'm not convinced that average and below average earners are avoiding responsible retirement investment by substituting excessive and unnecessary consumer spending for it.

Ok, so what would you estimate £100 a month for 40 years would give then?

[drainbrain]

ashleyman said:

Ok, so what would you estimate £100 a month for 40 years would give then?

At 4% £118k

at 6% £199k

[TooMany2cvs]

Sheepshanks said:

TooMany2cvs said:

Trexthedinosaur said:

And for those who can only just manage to scrape by on minimum wage?

A couple, each working 40hrs week on minimum wage, are earning £28k/year or £2,300/mo... AFTER income tax.

Trexthedinosaur said:

Where will this 5% come from?

5% of that is £115/mo between them.

If they've got kids it's probably not worth them both working.

Perhaps they could have waited until they were financially secure before having kids.

[drainbrain]

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.