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We can all worry about not making it to retirement, but for me it's doing what should be the basic thing for humanity, making it better for the next generation, just now i don't think anyone is getting that feeling in many ways, retirement being one of those, the problem is no government looks further than 5 to 10 years in anything this big, it's impossible for them to fathom, or for all sides to back without trying to make political statements around it.
the problem is no government looks further than 5 to 10 years in anything this big,
The current lot haven't even looked that far ahead, they've just been lining their pockets (and that of their mates / pub landlords) as quickly as they can....
the law stops you accessing your pension pot prior to that
Fairly certain polys point is that there's not really a reason for that law you either have enough money to retire or you don't.
I suspect people were spunking their pot and then were reliant on the state pension. Leaving nothing to be drawn down for care.....
The current lot haven’t even looked that far ahead
Oh, they have - they’ve looked ahead much further than that. Just only thinking about where their prospects are concerned, not your or mine.
the problem is no government looks further than 5 to 10 years in anything this big
And neither does the electorate.
The smart political move would be (for at least those who have not started earning) to give them the option to not get state pension at whatever age, in return for some advantage – like better private pension arrangements now (most early career people will only be getting 20% tax relief compared to 40% for high earners!).
You mean go back to "contracting out"? Another legacy of the last 13 years.
There is a good calculator here. Currently an 18 year old male can expect to live to 86. I'm hoping the fact my dad got to 90 pushes my average up a year two or or else I'm counting down from 21 years left.
Should I go at 21 years I will have been on the OAP pension for 18 years. No wonder it is expensive.
Averages are just that of course. There are many stark divides like if you live on one side of a local park in Glasggow your life expectancy is 14 years less than if, like me you live on the other side in East Dunbartonshire.
"In the part of Drumchapel that overlooks the park, life expectancy is 68.3 years for men and 71.3 for women, while in directly opposite Bearsden, it is 82.8 "
https://scottishleftreview.scot/scotlands-divided-health-is-tantamount-to-social-apartheid/
Generation X are the least well provided in terms of private pension as the move from defined benefit to defined happened largely in their working lives, auto enrolement means the young are saving far earlier than my generation did.
Adding to what Bigrich said.
When I started my BT apprenticeship aged 16 back in 82, BT retired everyone at 60, the average age that anyone got to enjoy that final salary pension till was 61. Okay there would have been a lot a hell of a lot skew, due to the physical/mental toil WW2 would have put on those retiring and smoking. But at the time in '82 BT employed 250,000+ with a fair portion not in hard labour, so I guess a good sample of the general population. Did those pension actuaries at the time base their figures against that 12-18 months of payments, to sustain a final salary scheme. Said fund got buggered when it was raided to pay for early redundancies later on.
I'll get £409 a month off the scheme in 2 years time, as I put 12 years into it, but it'll get hammered on the income tax as no doubt I will still be working paying into that contrib pot as long as I can. Well until the OA in my fingers gets to the sod it I need to give up stage.
https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07
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clickclickclick...clickclickclick...clickclickclick...clickclickclick... it only goes up to 111 boring.
As per a few above, I'm not so concerned about a rise in the state pension age but I am very concerned about the NMPA increasing further (moving to 57 from 2028).
I'm currently wondering about various strategies to use equity in the house for bridging any gap that opens up, if I have too much tied up in the pension.
Might rent the house out and live in a van for a bit or something
Here's an example of domestic fiscal policy in action . I left school in 1971 to work in a factory. I agreed with my mum that I would contribute to renting a colour telly , the only programme I really cared about was Top Of The Pops . It clashed with something mum wanted to watch so I lost . I said I wouldn't pay my share she said she'd send it back if I didn't. I tried calling her bluff and sure enough it went back!
Try telling young 'uns that today and they won't believe you !
Numbers out today
Moderate lifestyle = £31k pension
Comfortable lifestyle = £59k pension.
Seems high, but the former is close to where my current pensions would get me, which disappoints.
There to be challenged I suppose, I think the latter needs in excess of £1m on retirement, not many have that.
Source?
I would guess most people won't have 31k a year from any pension but would also question why you need 60k for a comfortable lifestyle when presumably things likes mortgage payments are long gone.
It is from this lot I guess - https://www.retirementlivingstandards.org.uk/
Basically an industry mouthpiece for a load of financial services companies.
Includes gems in the comfortable category such as 'Replace kitchen and bathroom every 10/15 years.' and 'Extensive bundled broadband and TV subscription.'
I would guess most people won’t have 31k a year
most people don't have £31k a year pre-retirement...
Yes… but we have below moderate lifestyles. Wear coats in doors, frugal home cooked meals, ancient old cars, etc. Who knows what “moderate” means… could be anything.
One thing’s for sure… it’ll include a mobile phone, flat screen TV, the occasional coffee… we didn’t have avocados in my day… 😉
Presumably this is a couple? Both getting state pension only gets them halfway there but yes 31K would be a lot for many people but then then don't have a moderate lifestyle.
31k a year blows my mind. Is that each so 62k for a couple.
When I'm retired and have no mortgage my days are going to be filled with hiking with a packed lunch, buying ingredients and cooking meals, gardening, visiting friends and family. Any holidays will be in term time. I have no idea how to get this to 31k
But is clearly utter nonsense.
When I’m retired and have no mortgage my days are going to be filled with hiking with a packed lunch, buying ingredients and cooking meals, gardening, visiting friends and family.
Sounds like death will come as a welcome release.
Well below the minimum as I expect most are. Of course there will be more than enough at the other end to keep inflating things that were once normal purchases out of reach.
My big pension spreadsheet shows that you need a pot of £1.9m at a 3% drawdown, or 1.4m at 4% drawdown to get the 59k comfortable situation (which a lot of people on above uk average salaries are probably going to expect - and just to make a assumption the vast hoards of IT middle management that makes up STW). The bbc article which has highlighted this ( https://www.bbc.co.uk/news/business-68222807) then goes on to say the average (joint) pot is like 275k.
So that's depressing. I thought I was doing ok on my pension and might be able to retire at 60, but it seems not (two kids and currently ok salary so ideally i'd like to be comfortable as I die!).
(Numbers for the minimum are 560k ish @4% and £600 ish @ 3% - haven't even got that at the moment!)
The average uk salary is 34k in 2023. So that means it would take 55.8 years to earn 1.9 mil if you saved every penny. Obviously unrealistic but illustrates the shitshow we are in, and how unhelpful the comments such as 'just plan properly / be astute" are as a solution. Its of course important to plan, but unrealistic to think we can all plan out way out if this mess.
Current lifestyle costs us as a couple ~22k a year and that includes private health care, occasional meals out, servicing our vehicle, fuel and bike park tickets.
Would imagine similar costs in 20 years time when we're settled down with a house.
Think it makes a difference if you're someone who buys things because they need it as opposed to because they want it.
It not the age, it's the mileage.
I got 10 year olds when my parents had 20 year olds and my pops had 30 year olds.
I can work cos i don't give a fudge.
I'm frugal but wish our expenses were that. Kids and houses are bloody expensive.
I think it depends on how you view comfortable, for some their comfortable normal lifstyle is someone elses dream, a lot of folk are a tad out of touch, many aspire to so much, thinking it will bring happyness and contentment...sometimes it does of course but often not.
For example 59k a year to me would be a huge income, but for many on here its pennies, yet i feel i have a good happy content life now on less than half that at 53 years old and still working, probably well into my 60's.
Of course i dont have a huge collection of expensive items, or have a 70k car or a 800k house or go on several ski trips each year, but then im not chasing that...im chasing do i feel happy more days than i dont.
I think content is something that is a thing of the past, imo a massivley increasing number of people chase the wrong things.
I think the younger generation are really suffering because of this...and its so hard now for young people to have hope in such a greedy world, particular the UK...
So much is taken out by the ever increasing few who simply never have enough and are never happy with what they have..
ashhhFull Member
The average uk salary is 34k in 2023. So that means it would take 55.8 years to earn 1.9 mil if you saved every penny. Obviously unrealistic but illustrates the shitshow we are in, and how unhelpful the comments such as ‘just plan properly / be astute” are as a solution. Its of course important to plan, but unrealistic to think we can all plan out way out if this mess.
Not accounting for compound interest it doesn't.
Taking your average salary of £34k and saving 20% of it into your pension for 45 years gets you the 1.9mil (well £1,867,123.83 actually) at a fairly conservative 5% growth annually.
I think the younger generation are really suffering because of this…and its so hard now for young people to have hope in such a greedy world, particular the UK…
So much is taken out by the ever increasing few who simply never have enough and are never happy with what they have..
Yeah this is a concern. I feel like my generation (40s) are probably the last for whom living in a mortgage-free house in retirement will be a reasonable 'normal' expectation. Me and MrsD scraped in by the skin of our teeth- the mortgage on our first-time buyer house is set to run until MrsD is 65, though hopefully we'll get it done sooner.
As people have kids later, spend more on rent, buy houses later (if at all), they won't have time for pensions. We'll have people on ever-smaller pensions, renting ever-more expensive housing from a small cadre of uber-wealthy landlords and private equity funds. Some will inherit half a house at 65 when their parents pop-off. The rest will be even more ****ed. Oh, and the declining birth rate means there's fewer of them too. Ouch
Home ownership among people aged 35-44 has plunged – ONS
Fair point..but I ignored interest and inflation. Given that my pension is around 5% and so is inflation at the moment it seems reasonable as a real world comparason. And i get that at 55 years rather than 45 (assuming the employer contribution is in the 20%).
And even at 45, assuming you get that salary in your mid 20s, you're still looking at 70 anyway! I
How many people on £34k could afford to save 20%? I know I can't.
How many people on £34k could afford to save 20%? I know I can’t.
Pretty much none I would imagine, in fact they can probably afford to save around 1% so would need to have some VERY good interest levels to get anything worth mentioning.
How many people on £34k could afford to save 20%? I know I can’t.
That 20% is broken down into 3 parts;
1) Employee contribution
2) Employers match
3) Gov't tax back / contribution.
Therefore to hit the 20% you're really only looking at 8(ish) percent contribution from the employee. I expect most people will be saving there or thereabouts.
I expect most people will be saving there or thereabouts.
I think you're being optimistic.
When I look about most employers seem to offer really poor pensions. my mrs is always looking as hers is ~ 3% matched. So a grand total of 6% I've never seen the gov tax back as most are paye. She can't afford any AVC's so it is what it is.
I'm lucky that my employer is much better, but it's bloody rare and one of the reasons I work where I do.
I think you’re being optimistic.
8% contribution was the default contribution about into the company pension scheme when I was a student in a call centre. Most jobs since have been of that sort of %.
On a quick look it would appear the gov't nest pension scheme is set at 8% too.
I pay 7% into a salary sacrifice scheme as this gets me the maximum contribution from my employer (8%). That is pre-tax/NI so AFAIK, point 3 has no effect on the amount saved.
So 15% of my headline salary is being invested, but I'm only saving 7%. At this time I can't afford to increase that and can't see that changing in the near future.
EDIT: just checked the pension portal and my employer also contributes their saving in NI payment so that's an extra 13.8% of my contribution.
Surely an immediate solution is to remove the higher rate NI payment and make it a flat rate?
Don't forget to take inflation into account. For your £43,000/yr "comfortable" figure you'd actually need an income of ~£92,000 if you retire in 30 years in order to enjoy the same spending power.
There's a reason your MP's final salary pension scheme is index-linked.
Most other final salary pensions schemes have been down graded.
What about down grading mp's pensions to zero to focus their tiny little brains.