I'm 30 with no pension...

[drainbrain]

CarlosFandango11 said:

When you're used to £12k then it does.

Going from earning £12k and working to earning £14k and not working.

So now the guy on £12k has to assemble the £180k pot. (to provide the £6k which adds to the state pens £8k to make the £14k)

Remind me again how much of his £1000 a month he is to fund this pension with?

Keep it simple. £20pcm? £50pcm? £100pcm? And does this one have a £500pcm mortgage too, or a £300pcm I bed flat on rent?

Edited by drainbrain on Wednesday 1st February 18:31

[mjb1]

Welshbeef said:

Didn't read my post did you.


He DOESNT need £22k when he retires
No mortgage
No commuting costs
No peak holiday costs
No work uniforms
No kids to pay for living at home


Let's say his mortgage is what? £500 pcm so he then only Needs £16k
Commuting well let's say he burns £2k a year on fuel alone so that reduces it down to £14k

State pension £8.6k so he needs to fun £5.4k
So he would roughly need a pension pot of £162k - as a lower rate tax payer he would have to pay in "only £130k over the 40-50 ears he is working so £216-270pcm.
Oh but hold on let's assume his employer matches his contributions so guess what he only needs to be paying in £108-£135pcm assuming ZERO investment growth (range being how long he decides to work for /contribute into a pension).

Easy really isn't it.

Assuming that in 40 years time when he gets his state pension that a) it still exists, and b) it's kept up with 40 years of inflation. Something's got to give in the nation's social security costs, given the ageing population and care costs. Wouldn't be a surprise if the state pension is means tested by then (after all, everyone retiring by then should have a workplace/private pension) - "oh we see you have a £5.4k/yr pension already, you won't be needing all of this state pension after all".

You also assume that his private pension fund has grown at a rate to match inflation (it may well do, and even better). My crystal ball isn't good enough to know how things are going to pan out, but the current scenario of final salary pensions and the govt's triple lock isn't sustainable. Retirement over the last 20 years or so has looked pretty good for many people - the baby boomers did good, especially the career ones with final salary pensions. But now we are getting towards the stage where the oldest welfare generations are coming up to retirement age, and it's going to be a big drain on the nations purse.

One thing that does seems apparent to me with modern pension planning is to 'either go big or go home'. You either need to be putting aside a good proportion of your income (and a decent employer contribution is a big help), or you're probably better off saving nothing at all and living off the state in retirement - there'll always be help for the poorest (social housing, care homes, state pension).

I do agree with you that in retirement, you should be able to live comfortably on a lot less money (assuming you bought a house and are now mortgage free), but we see a lot of people currently hitting retirement and in receipt of very generous final salary pensions, and it sets a bit of an expectation for the younger generations.

Incidentally, I didn't start any real form of pension contributions until quite recently (late 30's), and even now it's quite modest in the scheme of things, so I'm falling right in the gap that I suggested above, between going big and going home!

[CarlosFandango11]

drainbrain said:

CarlosFandango11 said:

When you're used to £12k then it does.

Going from earning £12k and working to earning £14k and not working.

So now the guy on £12k has to assemble the £180k pot. (to provide the £6k which adds to the state pens £8k to make the £14k)

Remind me again how much of his £1000 a month he is to fund this pension with?

Keep it simple. £20pcm? £50pcm? £100pcm? And does this one have a £500pcm mortgage too, or a £300pcm I bed flat on rent?

Edited by drainbrain on Wednesday 1st February 18:31

No, if you read my post you'll see I'm not suggesting what you're suggesting.

[Welshbeef]

drainbrain said:

CarlosFandango11 said:

When you're used to £12k then it does.

Going from earning £12k and working to earning £14k and not working.

So now the guy on £12k has to assemble the £180k pot. (to provide the £6k which adds to the state pens £8k to make the £14k)

Remind me again how much of his £1000 a month he is to fund this pension with?

Keep it simple. £20pcm? £50pcm? £100pcm? And does this one have a £500pcm mortgage too, or a £300pcm I bed flat on rent?

Edited by drainbrain on Wednesday 1st February 18:31

Are you deliberately misreading posts and getting all her up about what you think you've read or is it a case of brain drained?

[drainbrain]

mjb1 said:

1) One thing that does seems apparent to me with modern pension planning is to 'either go big or go home'. You either need to be putting aside a good proportion of your income (and a decent employer contribution is a big help), or you're probably better off saving nothing at all and living off the state in retirement - there'll always be help for the poorest (social housing, care homes, state pension).

2) I do agree with you that in retirement, you should be able to live comfortably on a lot less money.

1) I wholeheartedly agree. This is both the truth and the problem. However, in planning retirement an underfunded pension will still produce SOMEthing (which is better than nothing). The underfunded pension serves as a component of retirement finance. People need to be aware of that, and that other components will be required to avoid hardship etc

2) I wholeheartedly disagree. Why should you aim to live on less when you retire ? I'm retired. Can't see it's altered the bills a jot. Spend more if anything.

[Welshbeef]

drainbrain said:

1) I wholeheartedly agree. This is both the truth and the problem. However, in planning retirement an underfunded pension will still produce SOMEthing (which is better than nothing). The underfunded pension serves as a component of retirement finance. People need to be aware of that, and that other components will be required to avoid hardship etc

2) I wholeheartedly disagree. Why should you aim to live on less when you retire ? I'm retired. Can't see it's altered the bills a jot. Spend more if anything.

You don't have a mortgage any more you don't have commuting costs anymore you don't have working clothing costs you don't have to go on holidays peak time due to kids term times you don't have kids living at home so paying for them you don't have more than 1 car /you don't need more than 1. Water meter costs will drop as only 2 in house no kids

[drainbrain]

Welshbeef said:

Are you deliberately misreading posts and getting all her up about what you think you've read or is it a case of brain drained?

sssshhh! I'm like you. I like nothing better - in fact FAR better - than going walks with kids. As you say, costs £0. But doing nothing's best enjoyed in peace and quiet.

But goodness me that stuff was profound- about money and happiness. Takes me back to the 60's. Teenage hippy dropout lecturing bored dad about materialism. He seemed to be under the impression that he'd rather be rich and unhappy than poor and unhappy and that there was some doubt about the correlation between the two. He also thought that the thing about money was that the more you had the more material choice you had.

Bet he didn't ever dream that 5 decades later the dropout kid would be online with people who really don't know how to make the choice of what to do with it.

Interesting times.

Edited by drainbrain on Wednesday 1st February 19:53

[drainbrain]

Welshbeef said:

You don't have a mortgage any more you don't have commuting costs anymore you don't have working clothing costs you don't have to go on holidays peak time due to kids term times you don't have kids living at home so paying for them you don't have more than 1 car /you don't need more than 1. Water meter costs will drop as only 2 in house no kids

Who hasn't got a mortgage? I've got a mortgage. (aged 65). And when I sell the house I'll be getting another one. Interest only too, as always. Commuting costs is a business expense. Haven't paid a commuting cost since 1977. Working clothes? Erm, haven't changed clothes when I came home since I was at school. Haven't had kid expenses for 15 years either. Actually it's time I started running up a few dad expenses....And car for me, car for her (is that allowed?) Business car was a business expense, so no personal change there. Actually I sort of fancy an outrageously expensive car. Even dearer than the work time toy. Water meter? Wouldn't have one in the house. Pay it via rates. Wouldn't even know how much water costs. And as I recall when the kid was at home, water and he weren't perhaps as regular acquaintances as I'd have liked.

I take it you can't relate to any of that.

[TheLordJohn]

[quote=Welshbeef]


Well if you only earn £22k what sort of pension do you expect? Even gold plated final salary pensions after 40 years continuous service pay out 2/3rds

As a pensioner you don't have to pay mortgage so don't need salary to fund that you don't commute nor have all the other associated work costs so again you don't need to have a salary to fund that.


You want to buy whatever you like and go wherever you like...hmm too much time with Jonny Depp me thinks. Sound like your expecting a retirement paying you MORE than you had when you worked which is an interesting prospect.

If you are 30years old now and facing a ceiling of salary @£22k based on current skills/training might one suggest you actually try to do something about that increase your life chances.
[quote]

Me and the wife earn £80k a year joint, and as much as possible is going into houses.
So yes, don't know where you get Jonny Depp from, but I fully intend to spend, spend, spend come my retirement.
GL with the £15k a year, though...

Edited by TheLordJohn on Wednesday 1st February 22:12

[mike9009]

drainbrain said:

Welshbeef said:

You don't have a mortgage any more you don't have commuting costs anymore you don't have working clothing costs you don't have to go on holidays peak time due to kids term times you don't have kids living at home so paying for them you don't have more than 1 car /you don't need more than 1. Water meter costs will drop as only 2 in house no kids

Who hasn't got a mortgage? I've got a mortgage. (aged 65). And when I sell the house I'll be getting another one. Interest only too, as always. Commuting costs is a business expense. Haven't paid a commuting cost since 1977. Working clothes? Erm, haven't changed clothes when I came home since I was at school. Haven't had kid expenses for 15 years either. Actually it's time I started running up a few dad expenses....And car for me, car for her (is that allowed?) Business car was a business expense, so no personal change there. Actually I sort of fancy an outrageously expensive car. Even dearer than the work time toy. Water meter? Wouldn't have one in the house. Pay it via rates. Wouldn't even know how much water costs. And as I recall when the kid was at home, water and he weren't perhaps as regular acquaintances as I'd have liked.

I take it you can't relate to any of that.

+ free TV license
+ winter fuel allowance
+ free bus travel
+ 10% off at B&Q on Wednesday
+ no winter skiing holiday



I don't see many differing, realistic options from the 'don't bother with a pension brigade' which would suit the OP. What other options are available to him if he wants to retire?

Mike

Edited by mike9009 on Wednesday 1st February 20:35

[drainbrain]

mike9009 said:

+ free TV license. - won't pay it on principle. Wife does (chicken)
+ winter fuel allowance - £200. Gets spent on Xmas booze.
+ free bus travel- Yep. Great. Used it twice in 5 years. Saved maybe £3
+ 10% off at B&Q on Wednesday - stunned by this! Confirmed by tradesman. A definite from now on.
+ no winter skiing holiday - erm I have a slight issue with ski-ing. DAK amp. Mind you, my young Invictus winning pal is about to take it up. But he's 25.

Option? Magic Beans. Many many varieties. A well trod path. And if they grow into a big enough beanstalk who knows? You might never want to stop.

Edited by drainbrain on Wednesday 1st February 20:45

[GT03ROB]

drainbrain said:

Welshbeef said:

You don't have a mortgage any more you don't have commuting costs anymore you don't have working clothing costs you don't have to go on holidays peak time due to kids term times you don't have kids living at home so paying for them you don't have more than 1 car /you don't need more than 1. Water meter costs will drop as only 2 in house no kids

Who hasn't got a mortgage? I've got a mortgage. (aged 65). And when I sell the house I'll be getting another one. Interest only too, as always. Commuting costs is a business expense. Haven't paid a commuting cost since 1977. Working clothes? Erm, haven't changed clothes when I came home since I was at school. Haven't had kid expenses for 15 years either. Actually it's time I started running up a few dad expenses....And car for me, car for her (is that allowed?) Business car was a business expense, so no personal change there. Actually I sort of fancy an outrageously expensive car. Even dearer than the work time toy. Water meter? Wouldn't have one in the house. Pay it via rates. Wouldn't even know how much water costs. And as I recall when the kid was at home, water and he weren't perhaps as regular acquaintances as I'd have liked.

I take it you can't relate to any of that.

I keep hearing this argument about not needing as much money when you retire as when you are working & totally fail to understand it, unless there is a drop in standard of living. Kids are frequently cited, but lets face it for most they will have left well before retirement. Mortgage? Well that should have gone before retirement too, but there are a lot of retired people with mortgages. The biggest advantage of work is not that I earn, but that it reduces the time available to spend!!

I think the reality is that a lot of people suddenly discover they have more disposable income from around 50 as the kids go, get into a habit of living better, then retirement will come as nasty shock as they potentially see their income drop.

[fat80b]

drainbrain said:

Okay. Two partners run a business. The business buys a property for £6.5k. It is let for £150pcm. 5 years later, one partner says to the other, if I give you 5 grand can I have that for myself? The other says yes.....

@drainbrain, you said you'd come back with more details on the £6.5k properties that can yield 150pcm

Any chance of a link demonstrating one of these?

Bob

[Hainey]

fat80b said:

drainbrain said:

Okay. Two partners run a business. The business buys a property for £6.5k. It is let for £150pcm. 5 years later, one partner says to the other, if I give you 5 grand can I have that for myself? The other says yes.....

@drainbrain, you said you'd come back with more details on the £6.5k properties that can yield 150pcm

Any chance of a link demonstrating one of these?

Bob

I dont know about those figures, but where I work the surrounding area has properties that can be had for 12.5-20k and yield about 150-300 per month.

However, the people who inhabit those properties, what you are actually buying to begin with, and the general associated ball ache that goes with it means it's not exactly an easy lifestyle managing it all. I know someone who has a few of them and he is looking to offload as he can't seem to get away from them and their issues. You soon start to see why everyone isn't in to it when entry is affordable to almost all.

Personally I've never had a unit trust call me up at 3am on a Wednesday morning to tell me the toilets leaking sewage everywhere or had a tracker fund send the Police to my door on a Saturday afternoon due to a drugs death. I've never had to send some big boys who work the door to Hargreaves Lansdowne to get my dividend paid either.

[Welshbeef]

GT03ROB said:

I keep hearing this argument about not needing as much money when you retire as when you are working & totally fail to understand it, unless there is a drop in standard of living. Kids are frequently cited, but lets face it for most they will have left well before retirement. Mortgage? Well that should have gone before retirement too, but there are a lot of retired people with mortgages. The biggest advantage of work is not that I earn, but that it reduces the time available to spend!!

I think the reality is that a lot of people suddenly discover they have more disposable income from around 50 as the kids go, get into a habit of living better, then retirement will come as nasty shock as they potentially see their income drop.

What sensible/smart individuals should do once mortgage is paid off and the kids burden is gone put that extra away into pension savings or investments for the future. Unless you want Jam today then fine you make that call or you have half Jam today holf Jam on retirement.

Apparently first time buyers are getting onto the property ladder more into the 30-35age group so a standard 225 year mortgage would take them right up to retirement age. Some will be lucky and clear it sooner others not so and have to carry on into retirement others like braindrain has elected interest only mortgage so he has the issue of not owning anything and apparently not willing to downgrade to a smaller property to own outright so his free cash is a lot less than it could be his choice.

[TheLordJohn]

225 year mortgage, ferk that! I know, a typo...
PS - you've forgotten to include the inevitable extension to the mortgage as the wife wants a new kitchen, bathroom, windows, husband; delete as necessary.

[Welshbeef]

TheLordJohn said:

225 year mortgage, ferk that! I know, a typo...
PS - you've forgotten to include the inevitable extension to the mortgage as the wife wants a new kitchen, bathroom, windows, husband; delete as necessary.

Typo yes.

But actually with house prices getting out of reach and no way to correct I wonder if banks will start to look at 50years or inter generational mortgages?

Given such a vast proportion of U.K. Housing stock is owned outright no debt if a crash came those would sit tight no need to move unless a cheap jump up the ladder. The only ones to lose out would be those with mortgages who have to move be it divorce cannot afford the repayments or need to move for work. This hits banks too.

[Hainey]

Welshbeef said:

GT03ROB said:

I keep hearing this argument about not needing as much money when you retire as when you are working & totally fail to understand it, unless there is a drop in standard of living. Kids are frequently cited, but lets face it for most they will have left well before retirement. Mortgage? Well that should have gone before retirement too, but there are a lot of retired people with mortgages. The biggest advantage of work is not that I earn, but that it reduces the time available to spend!!

I think the reality is that a lot of people suddenly discover they have more disposable income from around 50 as the kids go, get into a habit of living better, then retirement will come as nasty shock as they potentially see their income drop.

What sensible/smart individuals should do once mortgage is paid off and the kids burden is gone put that extra away into pension savings or investments for the future. Unless you want Jam today then fine you make that call or you have half Jam today holf Jam on retirement.

Apparently first time buyers are getting onto the property ladder more into the 30-35age group so a standard 225 year mortgage would take them right up to retirement age. Some will be lucky and clear it sooner others not so and have to carry on into retirement others like braindrain has elected interest only mortgage so he has the issue of not owning anything and apparently not willing to downgrade to a smaller property to own outright so his free cash is a lot less than it could be his choice.

There are a lot of advantages to being interest only though. It's easy to focus on the ways used to abuse them but many would rather have a house on IO and have the same value invested in a tax free shelter as its better from an inheritance standpoint.

[GT03ROB]

Welshbeef said:

GT03ROB said:

I keep hearing this argument about not needing as much money when you retire as when you are working & totally fail to understand it, unless there is a drop in standard of living. Kids are frequently cited, but lets face it for most they will have left well before retirement. Mortgage? Well that should have gone before retirement too, but there are a lot of retired people with mortgages. The biggest advantage of work is not that I earn, but that it reduces the time available to spend!!

I think the reality is that a lot of people suddenly discover they have more disposable income from around 50 as the kids go, get into a habit of living better, then retirement will come as nasty shock as they potentially see their income drop.

What sensible/smart individuals should do once mortgage is paid off and the kids burden is gone put that extra away into pension savings or investments for the future. Unless you want Jam today then fine you make that call or you have half Jam today holf Jam on retirement.

Of course it's the smart & sensible thing to do, but maybe a little boring? Its the art of balance, how much do you sacrifice today, for a future that is uncertain in terms of both its length and quality (health/mobility). If length & quality were certain the choice would be easy!

It's not unreasonable for people to take some jam today. No prizes for being the richest corpse in the graveyard!

It is a personal choice however as you say.

[Welshbeef]

GT03ROB said:

Of course it's the smart & sensible thing to do, but maybe a little boring? Its the art of balance, how much do you sacrifice today, for a future that is uncertain in terms of both its length and quality (health/mobility). If length & quality were certain the choice would be easy!

It's not unreasonable for people to take some jam today. No prizes for being the richest corpse in the graveyard!

It is a personal choice however as you say.

But most have a spouse to consider so having lots of Jam today the chap goes first by some years leaving he wife living in utter poverty as the husband didn't want to be the richest corpse in the graveyard