Should You Save or Spend?
Discussion
Camelot1971 said:
DonkeyApple said:
Savers aren’t people who want to be buried in a gold lined coffin but people who don’t want to spend 20 years sitting in urine being beaten by their State carers. 
What makes you think that someone who doesn't like or want to spend money during the working part of their life would suddenly want to spend money when they are retired?My grandparents had money - not loads but enough to leave £100k each to their 4 daughters. They didn't want to spend any of it "just in case" and while it was nice my mum had some money I really wish they would have travelled or just done something with it while they were alive.
Having a pension that gives you the life that you want when you retire is sensible. Having 6 months or a years salary in savings is sensible. Having 10's of thousands in the bank with no desire to spend and a great desire to have more is, to me, just a complete waste.
But you’re still not quite getting the point. You need to save a proportion of the money that your employers give you if you wish to synthesise a similar lifestyle laternon when employers cease to need or want your services. It sounds like you are thinking that this would be the same amount of money but obviously to maintain the standard of living it is less. You won’t have a mortgage to pay, you won’t have children to feed and clothe and you won’t be co tributing to your pension or savings.
What you are also forgetting is that you do not know when or how you or your partner are going to die. What a saver will do is naturally cover that uncertainty. What spenders will do is just hope that someone else will pay for any of life’s uncertainties. One is self sufficient while the other is reliant ultimately on charity and welfare.
If you don’t know when you are going to die or whether it will be a nice death collapsing in the roses or a horrible lingering death where you will spend every penny that you have trying to make it as humane as possible for your life partner then you cannot time it that you will have died the same moment as you spent your last pound.
Now, if someone is a saver then why on earth would you expect someone with that mentality to every plan or gamble to run out of income before dying? Not ever going to happen. That’s a soender’s Thought process, the whole ‘Gay Disco’ thing of spend fast die young. No, the saver will obviously inevitably die leaving excess wealth by the very nature of being a saver and the fact that your end date and end style is an unknown. And what’s the actual downside? Your excess money becomes a little freebie to the people you love the most and will do anything to help along.
sidicks said:
p1stonhead said:
You overlook how much that is to a lot of people.
The current contribution rate is likely to provide a guaranteed income in retirement of 3-5% of the salary they retire on...Ideally every year when you get a payrise you should look to split the payrise x% is needed to cover the £ increase you have seen to your cost of living then the rest put it formally into pension ie instruct payroll to increase the payment to a higher rate.
Try to do this year on year and over time you will be able to creep up to 15-20% combined contribution to a pension.
For those who have just joined the auto enrolment sure it’s 2%+2% currently but that is creeping up slowly over the years. A big sudden change to say 10% into pension simply couldn’t happen as there are many people who are living hand to mouth.
I’m glad Auto enrolement exists as it will at least take some burden away from welfare state in the long future. However I think it should only start from £XKR salary as there are many people earning £2-4k etc a year it’s literally a pointless thing to do and sadly for them I doubt hey will keep addresses up to date and move pension pots to new employers as it’s a faf and tiny numbers so they will end up losing it sadly
Welshbeef said:
Everyone should have been taking up company pensions at least up to the matches contribution - it’s free money/ part of the employees package.
Ideally every year when you get a payrise you should look to split the payrise x% is needed to cover the £ increase you have seen to your cost of living then the rest put it formally into pension ie instruct payroll to increase the payment to a higher rate.
Try to do this year on year and over time you will be able to creep up to 15-20% combined contribution to a pension.
For those who have just joined the auto enrolment sure it’s 2%+2% currently but that is creeping up slowly over the years. A big sudden change to say 10% into pension simply couldn’t happen as there are many people who are living hand to mouth.
I’m glad Auto enrolement exists as it will at least take some burden away from welfare state in the long future. However I think it should only start from £XKR salary as there are many people earning £2-4k etc a year it’s literally a pointless thing to do and sadly for them I doubt hey will keep addresses up to date and move pension pots to new employers as it’s a faf and tiny numbers so they will end up losing it sadly
The issue is that there are two types of people living ‘hand to mouth’, the genuine and the self imposed. Ideally every year when you get a payrise you should look to split the payrise x% is needed to cover the £ increase you have seen to your cost of living then the rest put it formally into pension ie instruct payroll to increase the payment to a higher rate.
Try to do this year on year and over time you will be able to creep up to 15-20% combined contribution to a pension.
For those who have just joined the auto enrolment sure it’s 2%+2% currently but that is creeping up slowly over the years. A big sudden change to say 10% into pension simply couldn’t happen as there are many people who are living hand to mouth.
I’m glad Auto enrolement exists as it will at least take some burden away from welfare state in the long future. However I think it should only start from £XKR salary as there are many people earning £2-4k etc a year it’s literally a pointless thing to do and sadly for them I doubt hey will keep addresses up to date and move pension pots to new employers as it’s a faf and tiny numbers so they will end up losing it sadly
The State is there to support and protect the genuine, the latter are just making a free lifestyle choice to spend tomorrow’s income which is derived from saving today on goods and services they don’t need and can’t afford in the long term reality.
That second group need to be left to burn and live with their life choices but we need to ensure as a society that the former are protected. The work place pension is a step in the right direction and I’m sure the %s will be increased over time but we could all benefit from having the concept of saving taught at schools as it is abundantly clear that it is not being taught by parents in enough numbers which is probably a result of both the meteoric removal of earnings ceilings from traditional blue collar families meaning parents economic reasoning being based on blue collar incomes whereas their children are earning white collar incomes and must live by different economic reasonings combined with an enormous industry that very efficiently entices consumers to spend the money they should in fact be putting away to replicate future income.
Just look at the rise in the number of people who view holidays, new TVs and cars and eating out etc as human rights rather than luxury goods and services.
It’ll take decades to undo the carnage and at least one generation is probably lost to it but the importance is in protecting the newest generations from it.
So taking the basics
Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
Welshbeef said:
So taking the basics
Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
Renter or home owner? At the lower income level this defines what is needed to replicate income after employment. One has an ongoing high monthly cost that must be maintained until death, the other doesn’t. Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
DonkeyApple said:
Welshbeef said:
So taking the basics
Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
Renter or home owner? At the lower income level this defines what is needed to replicate income after employment. One has an ongoing high monthly cost that must be maintained until death, the other doesn’t. Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
p1stonhead said:
This is a huge issue. Those (a lot!) who will never be able to afford to buy, are going to be a ticking timebomb once they all want to retire. Check back in about 30-40 years to see how bad it is....
One benefit is that unlike council housing where they retain the family sized home, in the private market they will be free to downsize to the smallest of one bedroom apartments and as they will no longer be geographically confined by employment they can move to where bedsits and one bed apartments are cheapest. For example, this bungalow: https://www.rightmove.co.uk/property-to-rent/prope...
If the State pension is £6500 then this shows that a life renter isn’t going to be unable to house themselves, they just need to migrate to where all the other people who live on £6,500 a year incomes live. And the local corner shop will sell both own brand dog food and baked beans so you also have a choice of affordable food.
The ticking time bomb is really the outrage from the people who wake up one morning to discover they have to go and live with all the other benefit existers and live as one of them.
In the past this wasn’t an issue as they would have moved in with their children but no one likes old people hanging around, cluttering up the place with their free childcare, advice and empty bags of Worthers Originals. Which is why we are building all those detention centres in every town in Britain to warehouse them in until they just do the honourable thing and f
k off. All the solutions are there and always have been. Move to where all the other penniless people are like you or pool family resources.
sparks_E46 said:
Loads of my colleagues have opted out, would rather have the £70 or whatever a month in their pocket now. Some need it.
What are the real numbers here? Just using the £70/month and a post above that said the WP was 2% of salary then that would imply a gross salary of £42,000? If this is even in the right ballpark then the term ‘need’ really requires some detailed justification does it not?
There just isn’t anyone who earns that amount who cannot and should not be saving unless they are over spending on things they simply don’t need or can’t actually afford?
tighnamara said:
djc206 said:
True to an extent but now that we have legislation forcing employers to provide pensions again we’re back on the road to sanity.
Seriously, for most the actual pension contributions are a pittance and will most likely go nowhere near to providing anything in old age to live comfortably. DonkeyApple said:
Welshbeef said:
So taking the basics
Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
Renter or home owner? At the lower income level this defines what is needed to replicate income after employment. One has an ongoing high monthly cost that must be maintained until death, the other doesn’t. Let’s assume an individual qualifies for full state pension so that’s what £8,750 a year in today’s money.
Now let’s also say that they are on the U.K. average salary of £27k. What combined % of the £27k should be invested into a pension from 20-65 years old so that the potential pension will pay out £11,250 ie they get a £20k combined state pension plus personal pension? Which is 41.67% of their working salary as a paid private pension (knowing what it is as a % clearly we can then use that for any base salary)
The home owner bit v renting is how much £ do they need vs what they would like I’m saying let’s get average income person to get a combined £20k a year in retirement
Welshbeef said:
Everyone should have been taking up company pensions at least up to the matches contribution - it’s free money/ part of the employees package.
Ideally every year when you get a payrise you should look to split the payrise x% is needed to cover the £ increase you have seen to your cost of living then the rest put it formally into pension ie instruct payroll to increase the payment to a higher rate.
Try to do this year on year and over time you will be able to creep up to 15-20% combined contribution to a pension.
For those who have just joined the auto enrolment sure it’s 2%+2% currently but that is creeping up slowly over the years. A big sudden change to say 10% into pension simply couldn’t happen as there are many people who are living hand to mouth.
I’m glad Auto enrolement exists as it will at least take some burden away from welfare state in the long future. However I think it should only start from £XKR salary as there are many people earning £2-4k etc a year it’s literally a pointless thing to do and sadly for them I doubt hey will keep addresses up to date and move pension pots to new employers as it’s a faf and tiny numbers so they will end up losing it sadly
Easier said than done splitting any salary increase between pension and salary when you are already on a decent salary.Ideally every year when you get a payrise you should look to split the payrise x% is needed to cover the £ increase you have seen to your cost of living then the rest put it formally into pension ie instruct payroll to increase the payment to a higher rate.
Try to do this year on year and over time you will be able to creep up to 15-20% combined contribution to a pension.
For those who have just joined the auto enrolment sure it’s 2%+2% currently but that is creeping up slowly over the years. A big sudden change to say 10% into pension simply couldn’t happen as there are many people who are living hand to mouth.
I’m glad Auto enrolement exists as it will at least take some burden away from welfare state in the long future. However I think it should only start from £XKR salary as there are many people earning £2-4k etc a year it’s literally a pointless thing to do and sadly for them I doubt hey will keep addresses up to date and move pension pots to new employers as it’s a faf and tiny numbers so they will end up losing it sadly
Those who are living from week to week and seeing increasing living costs have only one thing in mind and that is surviving now.
It is difficult very difficult, I watched one of that rich family / poor family swaps a while back, the “poor” family struggled to survive week to week and any unplanned expenditure ( washing machine breaking down etc) was put on credit. The main breadwinner was working as a marine engineer doing 60 plus hours a week and only getting by. No real luxuries or wasting money. (2 young kids)
Cost of living in this country is spiralling out of control, granted there are those that waste money and purchase luxury’s they don t need but this is also being seen more and more with family’s that are being frugal and not wasting money.
Whilst the auto enrolment is good and will help slightly at retirement (only if they don’t start reducing government pension) some can’t afford the reduction of their monthly wage at the present time.
Additionally this also goes for the companies themselves with increasing business rates and charges running a business be it fuel, products etc.
Unless the government change their strategy and start helping small business things are only going to get worse.
Edited by tighnamara on Thursday 21st June 11:39
soupdragon1 said:
I agree, its really not enough, but I also think its still a good idea as it at least gets the ball rolling and once people have started, getting their annual statements etc, it brings it a little more to the front of their minds and maybe they'll start seeing the value of it and start contributing more after a while. Better to start with a little rather than nothing sort of thing.
Definitely. There will be a lot of people for whom the initial stumbling block will have been the actual setting up of a pension and with that sorted they will go on to contribute a suitable amount. You can only hold peoples hands so far and after that they just have to be left to sit where they have chosen to be but we know that form filling and financial products are a genuine nightmare for many people so the WP is great for getting them over that hurdle. Add to that the very fact that it exists will help others. Plus it supposedly mitigates the risk of company pension raids and defaults as well as undermining Unions who can often use fear and money as means to subjugate and oppress their followers in the worst examples.
It’s a start. It’s a good thing. It’s will rescue a lot of people. Those who opt out or just remain on the lowest of contributions are not really going to benefit from it but it is their decision as an adult and they must be allowed the freedom to make such decisions and the freedom to live with the consequences.
Welshbeef said:
Could we see it being increased 0.5% year on year 1% total (0:5% individual 0.5% employee) up to say 15% combined pot?
It’s already 4% and set to progress to 5% anyway but to get to 15% is a huge step change taken from future pay rises not existing base to soften the blow
I don't see it ever going to that sort of figure, not that it shouldn't just that it will be too unpopular with employees/employers alike.It’s already 4% and set to progress to 5% anyway but to get to 15% is a huge step change taken from future pay rises not existing base to soften the blow
DonkeyApple said:
What are the real numbers here? Just using the £70/month and a post above that said the WP was 2% of salary then that would imply a gross salary of £42,000?
If this is even in the right ballpark then the term ‘need’ really requires some detailed justification does it not?
There just isn’t anyone who earns that amount who cannot and should not be saving unless they are over spending on things they simply don’t need or can’t actually afford?
Hmm, can’t be right as I take home £1500 a month. The majority of my colleagues earn a similar amount to me. If this is even in the right ballpark then the term ‘need’ really requires some detailed justification does it not?
There just isn’t anyone who earns that amount who cannot and should not be saving unless they are over spending on things they simply don’t need or can’t actually afford?
I’ve always found my salary plenty, but as mentioned no children. If the wife became pregnant managing a mortgage, bills etc would be impossible.
Edited by sparks_E46 on Thursday 21st June 12:19
Sheepshanks said:
GT03ROB said:
I don't see it ever going to that sort of figure, not that it shouldn't just that it will be too unpopular with employees/employers alike.
Police and fire service are up at that sort of level.Gassing Station | Finance | Top of Page | What's New | My Stuff