Going part-time in your mid-30s?

[NickCQ]

tighnamara said:

It’s only going to get worse for the majority with younger people’s focus on “living for now” rather than balancing out to save for their retirement and future.

One of many side-effects of an extended period of near-zero interest rates. Time was, you could see your savings growing at 5-6%, meaningfully ahead of inflation, which was a powerful incentive to save. At the same time, borrowing was cripplingly expensive.

Today we have the opposite situation. Why save to overpay a mortage at 1.5% when inflation is at 2%?

[anonymous-user]

Condi said:

tighnamara said:

It’s only going to get worse for the majority with younger people’s focus on “living for now” rather than balancing out to save for their retirement and future.

This is slightly, if not very, unfair. It is hard, i think, for someone older to understand how things have changed with regards to pensions and living costs, as well as the wage stagnation since 2008.

One of the things which has most struck me is how pensions have been cut, and the change from DB to DC. Quite often in jobs you get 40 or 50 year olds doing the same job as a 30 year old, yet one has the benefit of a generous DB scheme, index linked and requiring little outlay from their salary, while the other has to pay in 10% of their wages and gets no guarantees at the end of it all. Or, as in my current job, there are 2 of us who are similar ages, only difference is I am new and he has been there 5 years, and the differences in the pension schemes are night and day. For people paying DC schemes, remember their wages have been suppressed over the last 10 years too, while living costs have been increasing. In the SE especially, when even paying rent is taking over 1/3rd of their salary, worrying about pensions is not that important.

Totally agree, i started in 2007 and just squeezed in to a DB scheme, not a great one (i.e. not 75% like some of the older lads, but max 40% plus a cash pot like a normal pension), I have been offered jobs with a 10-20% basic increase but a 5% pension vs the 21.95% i get today.

If you are older and always had, or have had, a DB pension, plus huge wage growth, house price growth, etc, you just cannot understand how difficult it is for some people, especially those in the lower wage brackets.

My wife for example works for a large UK company, entry level role, top 25 employer, pension is 3+3, granted it goes up as your seniority increases but 6% of even the average wage is nothing.

On the other hand my brother is a surveyor of some description for the council, could easily double his salary elsewhere but would lose his ridiculous benefits.

As above, with house prices and the cost of living so high the vast majority of people can't afford to put anything away for the future and equally no one wants to spend their youth stuck at home eating beans on toast so they can save £100 a month!

[red_slr]

I think its swings and roundabouts but there is also a lot of smoke and mirrors.

My first mortgage in 2000 ish was £750 a month on £100k. I was earning about £1800 a month *before tax*. So not far off 50% of my income after tax.

Today that same mortgage is about £450, maybe less actually. The flat I purchased is maybe worth £140k now on a good day so prices have not gone up that much in 20 years in this area.

Yes houses are more expensive in general but wages are generally higher too. That job I had in 2000 on £21k a year probably pays closer to £40k now.

That makes the £450 mortgage even more affordable.

Things I didn't spend money on in 2000.

Mobile phone
Car PCP
Sky tv
Deliveroo / delivery of fast food pizza etc
Ebay
Amazon
Prime, Netflix now TV.
Gin
Christmas jumpers for my pug (I don't have a pug but if I did I would buy it a Christmas jumper)
iPads / laptops etc

And I think that's where half the problem is tbh but I guess we are going OT.

[anonymous-user]

Lord.Vader said:

My wife for example works for a large UK company, top 25 employer, pension is 3+3, granted it goes up as your seniority increases but 6% of even the average wage is nothing.

Many companies offer some sort of "matching" arrangement. One I've seen recently starts out on the basis of 4%+4% and tops out on the basis of 7.5% + 7.5%. The total 15% is at least a significant start.

[Condi]

Lord.Vader said:

My wife for example works for a large UK company, entry level role, top 25 employer, pension is 3+3, granted it goes up as your seniority increases but 6% of even the average wage is nothing.

Indeed. Given that £50k a year pre tax puts you in the top 15% of earners, and say you were putting away 10% between you and your employer, that is £5k per year.

I know there should be investment growth above inflation, but someone working 30 years and putting away £5k per year (increasing by 2.5% per year in line with inflation) is only going to have a pension pot worth at most £20k per year, and possibly as little as £10k per year.

If you take an average earner (£27k/year), putting away 6%, their pot doesn't even get something worth £4k per year.

Edited by Condi on Monday 9th December 16:39

[red_slr]

Condi said:

Lord.Vader said:

My wife for example works for a large UK company, entry level role, top 25 employer, pension is 3+3, granted it goes up as your seniority increases but 6% of even the average wage is nothing.

Indeed. Given that £50k a year pre tax puts you in the top 15% of earners, and say you were putting away 10% between you and your employer, that is £5k per year.

I know there should be investment growth above inflation, but someone working 30 years and putting away £5k per year (increasing by 2.5% per year in line with inflation) is only going to have a pension pot worth at most £20k per year, and possibly as little as £10k per year.

If you take an average earner (£27k/year), putting away 6%, their pot doesn't even get something worth £4k per year.

Edited by Condi on Monday 9th December 16:39

That's they now base the pension calcs on SP age.
When I first started work I joined the pension scheme and it was a 30 year service scheme with possible draw down from 50.
So if you start work at say 21 they calculate it on you working for almost 50 years now!

If you contribute 5k a year over 50 years you are at almost a million quid, not bad. But do that over 25 years you are not even at 220k. (both calcs assume 4% growth)

[slipstream 1985]

NickCQ said:

tighnamara said:

It’s only going to get worse for the majority with younger people’s focus on “living for now” rather than balancing out to save for their retirement and future.

One of many side-effects of an extended period of near-zero interest rates. Time was, you could see your savings growing at 5-6%, meaningfully ahead of inflation, which was a powerful incentive to save. At the same time, borrowing was cripplingly expensive.

Today we have the opposite situation. Why save to overpay a mortage at 1.5% when inflation is at 2%?

Banks no longer have to offere decent interest on savings to boost their finiances they will just get bailed out if they need it.

[anonymous-user]

I’m pretty lucky that I pay 4% to get 21.95% and I add an additional 5% too.

So essentially I get 4% + 19.95% for my DB and 2% + 5% into a cash pot.

Our new starts get, 5-10% + 10%.

I am hoping my girlfriends increases, as 3% + 3% is rubbish!

All depends if we have kids or not, plan is 55-60, 31 now.

[NickCQ]

slipstream 1985 said:

Banks no longer have to offere decent interest on savings to boost their finiances they will just get bailed out if they need it.

Not entirely true.. look at what Metro Bank did to its deposit rates a few months ago when there were negative articles in the press about its liquidity position.

[The Cardinal]

I’ve now floated the idea of 4 days at 0.9 whole time equivalent with my boss and done all the sums at home. Some budgeting will be needed, but buying 50% more free time for a c.6% drop in income is almost a no-brainer.

I don’t have a date because there are lots of things up in the air with a restructure, but I’m pretty confident that my proposal for 4 days will happen from 1st April.

That’ll be something really big for me to look forward to in 2020.

[anonymous-user]

The Cardinal said:

I’ve now floated the idea of 4 days at 0.9 whole time equivalent with my boss and done all the sums at home. Some budgeting will be needed, but buying 50% more free time for a c.6% drop in income is almost a no-brainer.

I don’t have a date because there are lots of things up in the air with a restructure, but I’m pretty confident that my proposal for 4 days will happen from 1st April.

That’ll be something really big for me to look forward to in 2020.

Good man well done, I love my 4-day week, it’s up for renewal in January and in the 6 month trial has had no impact on the business.

I was lucky in that we, as a business, only do half day Fridays (4hours), so I tagged 1h extra per other day as opposed to taking a pay cut.