Retirement.....

.... from another thread, do we think retirement will exist in the future as it does today?  The pension deficit is huge and hardly covers everyday living expenses, do we honestly believe retirement as we see it, will be available for us later in life?

I know people who have paid in thousands upon thousands towards private pension schemes which have failed and are now worth nothing!!  What is the answer?

No.

I can't see the state pension existing for mid to high earners.

With respect to final pensions, don't know, I'll find out in a few decades.

I doubt it.
My grandfather and to a lesser extent my father's generation just got a job after school, stayed there until 65 then retired on state pension.

Those days are gone.
I know people my age (35) with no private pension, I only started one at 30.

Who knows where we'll be?

Im hope im never gonna retire and i hope im never gonna have a pension as they are a load of bollocks, as i stand now im not in a position where i can say for sure i'll never need one though. If all goes to plan i'll have a business empire and my kids will be well groomed in to the business world and they can take over from me while i live on a lake in Italy with fit women, i'd chill in the sun whilst they massage my back with baby oil. The scary thing is that if you earn enough money this can actually be real life... Buy we can all dream ay.

Varg

I know people my age (35) with no private pension, I only started one at 30.

My father was supposed to retire in 07, he had paid a private pension since he was 21, the payout in real terms works out less than he paid in each week - the reasons, poor investments and a collapse or several.  He has spent the last two years trying to retrieve a lump payment instead, they are simply not returning his letters or phone calls.  Who is responsible, no one knows as the original company who he took the policy with was swallowed by one company, then another and so on.........

Lets all pass the buck, while they literally have stolen tens of thousands of his money!!

peagreen

the payout in real terms works out less than he paid in each week

Yeah, the bad thing is - if the stock market goes crap when you are due to retire you lose value.
If you are due to retire a couple of years later when things have picked up, you're alright!

But I would expect a weekly pension to be less than a weekly wage.

Is it better to put your money into a normal saving account etc so at least you know its there? or invest in property or just get mortgage paid off quicker?

peagreen


.... from another thread, do we think retirement will exist in the future as it does today?  The pension deficit is huge and hardly covers everyday living expenses, do we honestly believe retirement as we see it, will be available for us later in life?

I know people who have paid in thousands upon thousands towards private pension schemes which have failed and are now worth nothing!!  What is the answer?

Don't let other people have control over your money and expect them to give a stuff about your interests.

stephen77


Is it better to put your money into a normal saving account etc so at least you know its there? or invest in property or just get mortgage paid off quicker?

Paying off debt should always be first on the list, but trying to use a normal savings account for retirement is plain barking mad.  You pay tax on the money when you earn it, then your taxed on the interest paid and all the while inflation eats away at it too.

The state pension appears to be one giant ponzi scheme which, if anyone other than the government were running it, would be illegal

In a word. Yes. I fully intend retiring as and when but I am not over reliant on either the state or any invested pension I have.

tac


The state pension appears to be one giant ponzi scheme which, if anyone other than the government were running it, would be illegal

Technically it is illegal.  There is nothing excluding the govt from the laws against ponzi schemes.  Fiat currency is also a ponzi scheme and was actually invented as such by one John Law.

Everyone is happy as long as the music keeps playing......

What the hell would I do all day if I didn't work? I dont play golf , I dont like walking dogs and I dont want to look after grandkids all day.
 
I want to work until I die. I hope that my last job is something I enjoy and that I have good workmates. Ill health may well stop me doing this but then if I'm too ill to work I'm too ill to do anything much that would cost money anyway so I'll just go into a goverment care home and rot away.

Wheels


Paying off debt should always be first on the list, but trying to use a normal savings account for retirement is plain barking mad.  You pay tax on the money when you earn it, then your taxed on the interest paid and all the while inflation eats away at it too.

So what do you recommend?
Cash in the attic?

I haven't got one. Currently using money to pay off the mortgage quicker, after that will just use a savings account.

A regular pension will probably cost me an absolute fortune and will no doubt pay out very little, so sod it

Varg

Wheels


Paying off debt should always be first on the list, but trying to use a normal savings account for retirement is plain barking mad.  You pay tax on the money when you earn it, then your taxed on the interest paid and all the while inflation eats away at it too.

So what do you recommend?
Cash in the attic?

Run your own pension and invest it yourself.  It doesn't take much knowedge to do a decent job of it.  Much, much cheaper than letting someone else do it.

Blue_Lagoon3000


Im hope im never gonna retire and i hope im never gonna have a pension as they are a load of bollocks, as i stand now im not in a position where i can say for sure i'll never need one though. If all goes to plan i'll have a business empire and my kids will be well groomed in to the business world and they can take over from me while i live on a lake in Italy with fit women, i'd chill in the sun whilst they massage my back with baby oil. The scary thing is that if you earn enough money this can actually be real life... Buy we can all dream ay.

That's exactly the sort of reaction from someone who knows nothing about pensions.

The problem is education. Most people stick their heads in the sand.

Who knows what the state pension is currently??   I'll tell you, a little over £90. Currently drawable from 60 for women and 65 for men. That's being equalised. I'm 31. By the time I retire, I fully expect any semblance of state pension to start between 70 and 75. State pension has been in decline for over 40 years. It's one of the reasons Thatcher encouraged us to buy up our council houses.  So the value would have use in retirement.

So how many of us can live in £90 a week? It leaves many pensioners in poverty now. You've seen them, gaunt, smelling of week old pi55, too poor to take a wash. It'll only get worse too.

There are many different types of pension scheme, a heads up for you self employed folks with employees (ltd companies really) , by 2012, you'll have to contribute to their pension. It's being phased in from then. Eventually, 3% will come from employers, 5% from employees. Via Personal Accounts scheme.

Pensions are the most tax efficient way of saving. The government gives you tax relief on your contributions. So if you were to put £100 a month into a pension, the government would put £25 in, if you're a standard rate tax payer. Higher rate tax payers can then claim up the 40% income tax bracket on their self assesment.  You could look at it as an instant return on your investment if you like. So for the time the money is invested, you have between 25% and 40% more working for you.

I'll talk about fundamentally basic pension schemes, typically Stakeholder, as they're probably the most common you'll see outside of company schemes. People who are ready for SIPS schemes already have the understanding I'll describe.

The money is invested in funds. These funds should be a diverse portfolio consisting of bonds (loans to blue chip companies and the govt (gilts)), commercial property (shopping centres and rents) and equities (shares, uk and overseas too). The more risk you care to take on long term savings, the greater the proportion of shares in the portfolio, with more overseas and uk, as compared with bonds. The capital will sit in these funds growing in value and attracting dividends too. Savings accounts CANNOT compete in the long term. In fact, the rate of inflation is currently outpacing the rate of interest you get on your savings in most cases. Your money will lose value. (ie ten years ago a tenner would buy 5 pints, now it buys 3. Result is your tenner is worth less, you need £15)

The Stakeholder is a cracking product. It has vastly reduced charges (No more than 2% annually) and lifestyle switching. This means that 5 years before your retirement date, the money is moved out of the risky fund and placed in to a Pension Protector Fund. This is cash based so your capital cannot lose value. The reason is this. 5 years is seen as the change from medium to long term. If for example you were due to retire autumn 2008 and didn't have lifestyle switching, your fund value would have dropped. Lifestyle switching would have switched the money out and protected you from that particular fall. A 5 year term is seen as not quite enough time for recovery.

Over the long term shares will out perform cash deposits (bank based savings). I can provide data to back this up. Yes the value will go down and up, but the net result is that it outperforms none the less. The long term smooths out the peaks and troughs.

You can stop and start  pension payments as you wish, they start from as little as £20 a month (£25 when the govt adds their bit) and can go up to your annual salary.

Self employed people: This is also an opportunity to reduce NIC's too. LTD companies: Payments can impact corporation tax too.

You will be able to draw your pension any time from 55 to 75. At that time you have two choices.

First you could buy an annuity, a product which pays an income, or secondly, probably the better idea, you take 25% TAX FREE and use the remainder to buy the annuity.

The downside is that once the money is in there, you cannot get it out until you retire. That's not a bad thing for undisciplined savers like me. If you die before you draw it, the money is given to a selected beneficiary.

If you have no pension planning, get it done now. Some is better than none. I'll happily answer any questions about pensions, I'm qualified to talk about them. It's something vastly misunderstood which we all need to be thinking about.  Don't stick your head in the sand. Don't write something off because you don't understand it.

Apologies for the rant, it's something I believe in.

Wheels

Varg

Wheels


Paying off debt should always be first on the list, but trying to use a normal savings account for retirement is plain barking mad.  You pay tax on the money when you earn it, then your taxed on the interest paid and all the while inflation eats away at it too.

So what do you recommend?
Cash in the attic?

Run your own pension and invest it yourself.  It doesn't take much knowedge to do a decent job of it.  Much, much cheaper than letting someone else do it.

Much like it's cheaper to fix your car yourself. Or do your own plumbing. But how many of us have the skill to manage a porfolio? Basic investors should join recognised schemes as it gives them more clout being part of a bigger picture. With charges from 1% (significantly cheaper than car dealer labour charges as a %age of cost!!!), it's not worth dabbling if you're not confident in the market place, or have the time/understanding to keep on top of it.

No!

Prepare to work right up to until the day you die