Retirement income
Discussion
Something that's rarely mentioned in chat about retirement income is the concept of investing directly into businesses esp. one's own or friends', or family's ventures etc.
However I think some of the best retiree incomes are earned from these investments especially retiring director/shareholders who continue to receive dividends from profitable ventures long after their resignation/retirement from directorial roles or other direct personal involvement.
And that's not to mention the sums the sale of such ventures or of shares in same can produce.
However I think some of the best retiree incomes are earned from these investments especially retiring director/shareholders who continue to receive dividends from profitable ventures long after their resignation/retirement from directorial roles or other direct personal involvement.
And that's not to mention the sums the sale of such ventures or of shares in same can produce.
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?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.
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 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.
Have you had a look at Mr Money Moustache? www.mrmoneymustache.com
Edited by drainbrain on Saturday 8th July 13:38
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.
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.
James_B said:
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?
That's what's called a false dichotomy, posed by people trying to score a point.To give an answer, no.
For instance, is it the old social psychology of a 'working class' attitude that always puts instant over future gratification?
Tit For Tat said:
drainbrain said:
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.
Actually, an awful lot of people do not understand pensions, or have any concept of how much they should be saving. That's not necessarily because they are stupid (although some are). More to do with the fact that pensions are a boring subject, and there is always something more exciting to spend the money on, and always plenty of time to start saving before they retire. So they put it off. And put it off. And then they reach 50, and don't have a pot to piss in.
And it isn't necessarily about having 'something more exciting' to spend on. Oftentimes it's about contingencies and emergencies as well. Think double glazing; central heating; new white goods; roof repairs etc ad infinitum - just like you and me. Then required non-essentials, like Xmas, birthdays, school trips etc etc. Then 'horrors' like having to get the kid an expensive games computer, tablet, designer trainers etc etc etc. It's easy to say you just don't get kids these things but they actually get psycho-bullied by each other if they don't, and it's no fun being the weirdo odd one out when you're a teenager. Weddings, funerals, bar mitzvahs. And even a very basic holiday for a family of 4 costs a FORTUNE these days.
It's about having all these things (and many many more) to get as well the basics and still be able to save MEANINGFULLY. And the depressing performance of underfunded investments is, in my opinion, what more than most things makes the folk who could afford at least SOMEthing for the future pot think it's not worthwhile.
Tit For Tat said:
Yes, there are always calls on the finances. But a bit of discipline can make a lot of difference. Bear in mind that all pension contributions will attract tax relief at highest marginal rate, so at least 20%. What other investment gives you an immediate 20% return ?! Plus even investing in a basic low cost FTSE tracker would have given you a circa 25% return over the last 12 months. Start early, increase contributions with every pay rise.
Yes there certainly are. And yes www.mrmoneymustache.com can show you just how much of a difference a bit of discipline can make. And yes pensions offer decent tax incentives (even if it's theoretical till you're 55). But they require you to have the money to invest in the first place which, as I'm trying to explain to you, doesn't exist for many. And the paltry sum they CAN invest (and I don't mean a couple of months a year I mean EVERY month for decades, which is another story) regardless of the %age uplifts and earnings doesn't amount to anything meaningful. Which doesn't stop some people, but definitely puts off others.
In your theory 5% of wages is tucked away. So take the example of someone on £24k a year. (millions, btw, don't come anywhere near that). So £80+ a month. + uplift to £100. For 40 years. At 4%.compounding. = £118k pot. = what? £5kpa if you're lucky? Maybe considerably less if it comes with a bell or whistle or two. Not saying it's not something, because it very is. But (see op) if the average retirement income is £18k inc state pension, your theory is probably already being enacted by those hardy individuals on lower wages who're disciplining themselves to save a bit.
Now you tell me what monthly contribution it takes at 4% growth to reach £20k pa. Which with £8k state pension on top is the figure where comfy retirement begins. Then tell me if you think that's a realistic monthly ask from an average or below wage earner with the average expenditure on basics/essentials/contingencies/TINY luxuries that people have these days.
What the thread needs is an average (or below) wage earner, maybe with a wife in part time work and a couple of young kids to tell us realistically what we are all theorising about.
Bet you if we get one the inadequate retirement saving will be far more about 'can't' than 'don't want to'.
(and Maximum Money Mustachers need not apply!
)
Bet you if we get one the inadequate retirement saving will be far more about 'can't' than 'don't want to'.
(and Maximum Money Mustachers need not apply!
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