Do PHers live in the real world?
Discussion
I know that there are a lot of powerfully built directors on PH but are there mere mortals too?
On a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
On a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
Couple of things:
1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
Brother D said:
Couple of things:
1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
Wealth from house prices don’t have anything to do with pensions. 1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
Your investment gains of 5-7% only valid if you look back a long way. The FTSE 100 tripled in value between 1990 and 2000 but in the last twenty years (which would be the period most important to people coming up to retirement as you usually pay in more as you get closer to retirement) the FTSE 100 hasn’t even kept up with inflation ie had you invested £100 in a tracker in 2000 you would have less money, not more (you would have done much better investing in housing).
More typical than a £2,000,000 pot I imagine, is the C £160,000 I accumulated over a full working life of about 40 years, mostly a result of buying back service in one long term employer's final salary scheme (cost a basic 6% of my salary plus 9% for the back service), which owing to financial need, I had to transfer into a personal pension in order to access it prior to normal pension age.
A conventional pension is, imo, not worth a candle; at the age of 55, I only able to take a £26,000 ish lump sum and £2,355 per annum, leaving the rest invested until I reached 64, then I was able to access another £13,000 ish lump and an additional £2,340 per annum.
Fortunately, especially now that interest rates are close to zero, one is no longer compelled to buy an annuity with the pot. Had I had the choice, I could and would have invested the money in BTL, which would be giving me a gross return now in the order of £2,400 monthly, rather than £4,695 annually, and of course, I would have been able to leave the properties to my children instead of donating my money to a couple of insurance companies.
A conventional pension is, imo, not worth a candle; at the age of 55, I only able to take a £26,000 ish lump sum and £2,355 per annum, leaving the rest invested until I reached 64, then I was able to access another £13,000 ish lump and an additional £2,340 per annum.
Fortunately, especially now that interest rates are close to zero, one is no longer compelled to buy an annuity with the pot. Had I had the choice, I could and would have invested the money in BTL, which would be giving me a gross return now in the order of £2,400 monthly, rather than £4,695 annually, and of course, I would have been able to leave the properties to my children instead of donating my money to a couple of insurance companies.
Esceptico said:
I know that there are a lot of powerfully built directors on PH but are there mere mortals too?
On a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
No you are not missing anything. The average UK pension pot is around 50kOn a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
GT03ROB said:
Esceptico said:
I know that there are a lot of powerfully built directors on PH but are there mere mortals too?
On a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
No you are not missing anything. The average UK pension pot is around 50kOn a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
Brother D said:
Couple of things:
1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/average-full-time-annual-earnings-in-the-uk/
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
In answer to the OP's question, I'd say they probably don't 1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/average-full-time-annual-earnings-in-the-uk/
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
https://www.google.co.uk/amp/s/www.express.co.uk/f...
Dangerous to highlight this, however. Despite the push to get people to save for pensions, at these sort of figures the pension payable is almost pointless IMO. At least you have the option of drawdown now as an annuity at present rates and with a pot of this amount would give you f all a month.
Dangerous to highlight this, however. Despite the push to get people to save for pensions, at these sort of figures the pension payable is almost pointless IMO. At least you have the option of drawdown now as an annuity at present rates and with a pot of this amount would give you f all a month.
Most of the stuff on the internet is made up.
Most of the made up stuff is shouted by people who are not comfortable with their lot.
Therefore what you read on here is self promoting, made up visions of what people think makes them sound impressive.
There are a few on here at the top.
A few at the bottom.
A lot by most measures the same as you and I, give or take £10k salary, 10 years of age, 1 bedroom, 1 ensuite and 5 years on the age of our car!
I've found the best thing to do, is try and identify the big wigs, enjoy their posts and ignore the others!
Most of the made up stuff is shouted by people who are not comfortable with their lot.
Therefore what you read on here is self promoting, made up visions of what people think makes them sound impressive.
There are a few on here at the top.
A few at the bottom.
A lot by most measures the same as you and I, give or take £10k salary, 10 years of age, 1 bedroom, 1 ensuite and 5 years on the age of our car!
I've found the best thing to do, is try and identify the big wigs, enjoy their posts and ignore the others!
Brother D said:
Couple of things:
1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
sorry but 30k per MONTH average wage???? 1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
wastedyouth86 said:
Brother D said:
Couple of things:
1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
sorry but 30k per MONTH average wage???? 1. Compound interest is just an amazing thing. If you put aside just $100 a month for 50 years you would now have nearly $200K alone with a modest 4% interest rate (don't forget interest rates are crazy low vs the normal 6 or 8%) https://www.investor.gov/financial-tools-calculato...
Add an extra $100 per month per decade (100 for 1st 10 years, 200 next 10 etc) and you easily end up at the $500K mark.
2. Average wage for the past 20 years has been in the mid 20's. We are now at 30K per month average wage https://www.statista.com/statistics/1002964/averag...
3. Property inflation has been significant resulting in massive increase in personal total wealth.
4. Don't forget pensions etc - old f*cks probably even have final salary ones and DC ones.
5. Investments - even a modest investment in a tracker fund will have given 5-10% returns over time.
Esceptico said:
I know that there are a lot of powerfully built directors on PH but are there mere mortals too?
On a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
I think as you say there are some wealthy people on here - it's a site about cars and rich people often like cars.On a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
So without knowing the thread that doesn't surprise me at all.
It's certainly not normal and representative of the average person in the UK though.
The ones that get me are the "How much would you need to retire?" threads.
I think I started one and it was quite interesting the amount of people who were sure they'd need "at least" £5M or some amount that 95% of the population wouldn't ever dream of getting close to.
Esceptico said:
Your investment gains of 5-7% only valid if you look back a long way. The FTSE 100 tripled in value between 1990 and 2000 but in the last twenty years (which would be the period most important to people coming up to retirement as you usually pay in more as you get closer to retirement) the FTSE 100 hasn’t even kept up with inflation ie had you invested £100 in a tracker in 2000 you would have less money, not more (you would have done much better investing in housing).
The FTSE 100 index doesn't include dividends but funds do.The price of HSBC FTSE 100 Index Retail Acc has nearly doubled since Nov 2000 - from 114 to 215. This is despite Nov 2000 being just before the dot com crash.
https://uk.finance.yahoo.com/quote/0P00000CUJ.L
Does the ‘average’ pot include those with nothing? Taking those out of it would give a better comparison.
For example I’m early 30s and have a current pot of ~£100k, that’s just via salary sacrifice, employer contributions and keeping tabs on performance.
One major factor was also upping my contribs to match my first ever pay rise.
The time element of pensions is very very powerful. My projection is for a pot between 500k and £1m, we’re not ‘rich’ at all, just started early.
For example I’m early 30s and have a current pot of ~£100k, that’s just via salary sacrifice, employer contributions and keeping tabs on performance.
One major factor was also upping my contribs to match my first ever pay rise.
The time element of pensions is very very powerful. My projection is for a pot between 500k and £1m, we’re not ‘rich’ at all, just started early.
PositronicRay said:
GT03ROB said:
Esceptico said:
I know that there are a lot of powerfully built directors on PH but are there mere mortals too?
On a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
No you are not missing anything. The average UK pension pot is around 50kOn a recent thread someone mentioned an “example” pension pot of £2 million. Got me thinking. Median wage in the U.K. is under £30,000 gross, per annum. Taking someone who is coming up to retirement and just for arguments sake assume they had always earned the median wage and had been working for 50 years. This is a pure guess but let’s say the average median wage over the 50 years is £15,000 PA (probably a bit generous). Unless my maths is failing me the person coming up to retirement would have earned only £750,000 over their entire working life. That is gross, before tax and before spending a penny. On that basis, I would expect the percentage of people with £2 million pension pots to be pretty low (<1%?) Or am I missing something?
PH is not the real world, or at least many of those who write multiple posts on such matters live lives that are not the norm. Some of those are socially aware enough to realise this, some are not.
I have no real statistics to back this up, only my observations having lived and worked in a number of different parts of the country, but I would think that Mr or Mrs average in the UK has a life something like this:
Born into a working/lower middle class family with 1-3 siblings.
State educated until 16-18 then on to college or possibly university.
Leave education and get a low paid job, hopefully in their preferred industry.
Maybe climb 1 or 2 rungs up the ladder.
Probably earn £25-£35K/annum over most of their working life.
Get married/live with long term partner from a similar background.
Save up deposit to buy/pay mortgage on a modest 2-3 bedroom property, although many cannot afford to.
Have 1-3 children who are educated in the state sector.
Possibly get divorced.
Work as an employee until retirement around 65 y/o.
Have quite uneventful but hopefully happy retirement living mainly off their state pension coupled with any other modest pensions/savings.
Die, leaving a small estate.
If you base your view of what an average life is in the UK by reading one of the PH retirement threads, it goes something like this:
Born into a middle/upper middle class family with 1-3 siblings.
Possibly living abroad as parents move for work (sorry, career).
Privately educated until 18 then on to a good university.
Leave education and get a job in their preferred industry.
Rise through the ranks by working 120hrs a week and just being brilliant.
Probably earn £250-£350K/annum over most of their working life.
Get married to somebody from a similar background.
Get given deposit by wealthy in-laws to buy a modest 5-6 bedroom townhouse (or as I recently read, just get bought a house by parents).
Move to a modest 5-6 bedroom house in the country whilst keeping a flat “in town”.
Have 1-3 children who are educated in the private sector.
Possibly get divorced.
Work as an employee until 35 y/o. At this point they set up their only successful consultancy.
Sell successful consultancy at 50 y/o. continuing working as an independent consultant.
Retire at 55 (apart from holding non-executive directorships for 2-3 companies).
Spend retirement keeping on the ball with the business world, checking on their investment and property portfolio, travelling to far flung places (always being able to speak the local language fluently), enjoying fine cuisine and wine, maintaining a modest collection of 1960’s Italian GT cars, giving their watch collection wrist time and running ultra-marathons.
Die, leaving a large estate.
I would estimate that less than 0.001% of the UK population have anything approaching a "PH life".
I have no real statistics to back this up, only my observations having lived and worked in a number of different parts of the country, but I would think that Mr or Mrs average in the UK has a life something like this:
Born into a working/lower middle class family with 1-3 siblings.
State educated until 16-18 then on to college or possibly university.
Leave education and get a low paid job, hopefully in their preferred industry.
Maybe climb 1 or 2 rungs up the ladder.
Probably earn £25-£35K/annum over most of their working life.
Get married/live with long term partner from a similar background.
Save up deposit to buy/pay mortgage on a modest 2-3 bedroom property, although many cannot afford to.
Have 1-3 children who are educated in the state sector.
Possibly get divorced.
Work as an employee until retirement around 65 y/o.
Have quite uneventful but hopefully happy retirement living mainly off their state pension coupled with any other modest pensions/savings.
Die, leaving a small estate.
If you base your view of what an average life is in the UK by reading one of the PH retirement threads, it goes something like this:
Born into a middle/upper middle class family with 1-3 siblings.
Possibly living abroad as parents move for work (sorry, career).
Privately educated until 18 then on to a good university.
Leave education and get a job in their preferred industry.
Rise through the ranks by working 120hrs a week and just being brilliant.
Probably earn £250-£350K/annum over most of their working life.
Get married to somebody from a similar background.
Get given deposit by wealthy in-laws to buy a modest 5-6 bedroom townhouse (or as I recently read, just get bought a house by parents).
Move to a modest 5-6 bedroom house in the country whilst keeping a flat “in town”.
Have 1-3 children who are educated in the private sector.
Possibly get divorced.
Work as an employee until 35 y/o. At this point they set up their only successful consultancy.
Sell successful consultancy at 50 y/o. continuing working as an independent consultant.
Retire at 55 (apart from holding non-executive directorships for 2-3 companies).
Spend retirement keeping on the ball with the business world, checking on their investment and property portfolio, travelling to far flung places (always being able to speak the local language fluently), enjoying fine cuisine and wine, maintaining a modest collection of 1960’s Italian GT cars, giving their watch collection wrist time and running ultra-marathons.
Die, leaving a large estate.
I would estimate that less than 0.001% of the UK population have anything approaching a "PH life".
It serves to remember what this place is. It's an overgrown TVR owner's club.
I'm sure it has become somewhat more diverse as it grew but still...
A lot of the people here are in the situation and time in life that they can have a rather expensive toy for drives / rides at the weekend, just for the sake of it.
I expect the average age is significantly higher than most online communities.
It's UK based and pretty UK-centric.
So to recap, it's white, male, middle aged, peak career, significant equity in property etc.
Just look at how right wing N P & E is to get an idea of how representative PH is.
In addition, consider the likelihood of somebody who is wealthy sharing information about their financial status compared to people who aren't but feel like they're surrounded by people who are...
I'm sure it has become somewhat more diverse as it grew but still...
A lot of the people here are in the situation and time in life that they can have a rather expensive toy for drives / rides at the weekend, just for the sake of it.
I expect the average age is significantly higher than most online communities.
It's UK based and pretty UK-centric.
So to recap, it's white, male, middle aged, peak career, significant equity in property etc.
Just look at how right wing N P & E is to get an idea of how representative PH is.
In addition, consider the likelihood of somebody who is wealthy sharing information about their financial status compared to people who aren't but feel like they're surrounded by people who are...
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