• This topic has 495 replies, 118 voices, and was last updated 1 week ago by andy4d.
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  • Premier Icon ton
    Free Member

    me and the good lady are doing very well on 20k between us. we had 60k between us when working. so how much money were we wasting ffs.

    Premier Icon mattyfez
    Free Member

    Serious question, do people really spend…

    £460 per person for clothing and footwear each year

    Its not a huge ammount, but a lot of my clothes last several years, I’d expect at least 5 years out of a pair of boxer shorts…so 460 per year per, per person seems a bit exessive, no?

    Premier Icon footflaps
    Full Member

    Yes but when the numbers given are obvious nonsense then its best ignored and goes nowhere towards helping people be financially literate

    Define nonsense, it clearly breaks down how they came to that figure.

    You may disagree with their definition of ‘comfortable’ but that doesn’t make it nonsense.

    The UK has £6.1 trillion in pension savings as of March 2018 (ONS figures), so there is a lot of pension wealth out there, just not very evenly allocated. EDIT: And I suspect that figure ignores ‘unfinanced’ DB pensions eg Civil servants etc which just come out of HM Treasury when they become due.

    so 460 per year per, per person seems a bit exessive, no?

    £875 per household according to ONS stats for 2018

    https://www.ons.gov.uk/aboutus/transparencyandgovernance/freedomofinformationfoi/consumerspendonclothes

    Serious question, do people really spend…

    I have to confess I’ve spent more than that with Rapha this month just updating my winter riding wardrobe…

    Premier Icon andy4d
    Full Member

    I find those pension calculators misleading. They often get you to type in how much you want in retirement then tell you how much you need to save to get that, failing to take into account any state pension you may get so it looks like you need to invest way more to achieve your goal. They also tend to show that your fund will give you x based on pretty low annuity rates with no mention of other option (draw down etc) so again you think you need to invest more.

    Premier Icon mattyfez
    Free Member

    The great con…

    What’s the state pension currently, about 6k per year? Whatever it is, it’s not going to rise in real terms.

    Premier Icon footflaps
    Full Member

    What’s the state pension currently, about 6k per year?

    £7,155.2 (£137.60 per week) at the moment.

    Rising at higher of

    Average earnings
    Prices, as measured by the Consumer Prices Index (CPI)
    2.5 per cent

    until they change the rules eg this year they’ll probably ignore earnings as it’s an anomolous figure due to CV-19.

    Premier Icon aberdeenlune
    Free Member

    It’s all designed to keep us all working for far too long.

    Run rabbit run,
    Dig that hole,
    forget the sun,
    and when at last,
    the work is done,
    don’t sit down,
    It’s time to dig another one,
    long you’ll live and far you’ll fly
    but only if you ride the tide,
    And balanced on the biggest wave,
    You race towards an early grave

    Premier Icon mattyfez
    Free Member

    I have to confess I’ve spent more than that with Rapha this month just updating my winter riding wardrobe…

    In good humour, I’d suspect you are not the demographic we are talking about.

    Premier Icon doris5000
    Free Member

    It partly depends on whether you like good stuff. But also what you do.

    I always see numbers like that, and figure I don’t spend anywhere near. But then I remember that I had to buy a decent waterproof for walking that cost £100. And then my wife bought me a jumper which should be counted against my account really. Oh, and my slippers were worn out and needed replacing… It always comes out to more than I think!

    Premier Icon tjagain
    Full Member

    Define nonsense, it clearly breaks down how they came to that figure.

    When they say to be comfortable in retirement you need above the average wage and the figure they quote is totally beyond possibility for the vast majority of the people of this country – then its nonsense

    total pie in the sky stupidity nonsense

    What they mean is if you want to continue your upper middle class lifestyle

    Premier Icon bullshotcrummond
    Free Member

    The UK average salary is something like £31k, isn’t it?

    That’s before tax, so £24720 after tax.

    Remove travelling costs, etc.

    So they are saying that you need the UK average salary to retire comfortably, for a single person.

    Premier Icon doris5000
    Free Member

    So they are saying that you need the UK average salary to retire comfortably, for a single person.

    But the average UK salary is often also paying National Insurance, a mortgage, pension contributions, and costs associated with raising children.

    Premier Icon poly
    Free Member

    But the average UK salary is often also paying National Insurance,

    don’t rule out that by the time you get your pension so are you!

    a mortgage

    yes that is potentially a big difference – perhaps more so with over stretched modern borrowers than previous generations of pensioners

    , pension contributions,

    are the average numbers before or after deduction of pension? e.g. my pension is salary sacrifice to gov have no idea what my contracted salary is to work out their average.

    and costs associated with raising children.

    well only those with children of that age. the average is worked out on all earners – so will include those who decide not to have a family, those who have yet to have a family and those whose family are already grown up as well as those who are funding childcare etc.

    Premier Icon poly
    Free Member

    When they say to be comfortable in retirement you need above the average wage and the figure they quote is totally beyond possibility for the vast majority of the people of this country – then its nonsense

    total pie in the sky stupidity nonsense

    What they mean is if you want to continue your upper middle class lifestyle

    TJ I think you’ve taken the word “Comfortable” rather too literally (ie. to mean than < this = uncomfortable). Comfortably well off has long been a euphemism for smuggly well off… You’ll notice there isn’t a category above it.

    Whilst you might say it’s beyond the realms of possibility for the vast majority of people – you worked alongside many people who will retire on pensions of that scale and some who would be horrified to survive on so little!

    I find those pension calculators misleading. They often get you to type in how much you want in retirement then tell you how much you need to save to get that, failing to take into account any state pension you may get so it looks like you need to invest way more to achieve your goal. They also tend to show that your fund will give you x based on pretty low annuity rates with no mention of other option (draw down etc) so again you think you need to invest more.

    Imagine being the financial advisor who told people that when they turn 67 they would get £7k pa from the government so only invest enough for £3k to hit your target when the govt decide to move the pension age to 70, or abolish it completely… Detailed discussions with a financial advisor will include it but also the caveats that it might not exist by the time you get there, and of course if you want to retire early you need the funds…

    Does anyone know if the number they quote as your “predicted annual pension” is presumed to be after tax or before?

    Premier Icon tjagain
    Full Member

    you worked alongside many people who will retire on pensions of that scale

    Nope – hardly anyone person I have worked alongside will retire on anything like that. a medical consultant who did a full 40 years might get close. No nurse will get anything near that.

    the biggest NHS pension you can get is half salary. How many NHS workers earn over £66000 pa?

    Edit – thats wrong – pre 96 nhs pension holders can get to 45 / 80 of final salery. Now the most you can get is 45 / 60 of career average

    I think thats right but the point still stands – NHS workers like me and those I worked with will get nowhere near that.

    Premier Icon doris5000
    Free Member

    Comfortably well off has long been a euphemism for smuggly well off… You’ll notice there isn’t a category above it.

    The old joke –

    A banker gets hit by a bus in London. As the paramedics put him onto a stretcher and prepare to lift him into the ambulance, they say, “Are you comfortable?”. The banker replies, “I make a good living”….

    Premier Icon Wibble89
    Free Member

    I think thats right but the point still stands – NHS workers like me and those I worked with will get nowhere near that.

    While that may be the value of the NHS pension, surely it’s personal choice whether to contribute in addition to another scheme out of your income?

    My company matches contribution to 4%, doesn’t mean I choose to blindly only contribute 4%. I look at my finances, my current commitments, my current lifestyle aspirations and my aspirations for retirement. I then make a decision of the opportunity cost on what to contribute which is a compromise.

    Premier Icon 5lab
    Free Member

    How many NHS workers earn over £66000 pa?

    I’ve no idea of the numbers, but most doctors, most management tier and probably most of the not insignificant IT department probably fall into that boat

    In fact from the NHS website (band 8c and above)..
    Examples of roles at band 8c – head of human resources, consultant clinical scientist (molecular genetics/cytogenetics) and consultant paramedic
    Examples of roles at band 8d include consultant psychologist (8c-8d), estates manager, chief nurse and chief finance manager.
    Examples of roles at band 9 include podiatric consultant (surgery), chief finance manager and director of estates and facilities.

    London weighting is 20% so that’d bring in band 8b as well

    Premier Icon tjagain
    Full Member

    I’ve no idea of the numbers, but most doctors, most management tier and probably most of the not insignificant IT department probably fall into that boat

    Wrong

    Most doctors earn far less than that. YOu do not get to those sort of sums until you are one of the seniors FY1. FY2, are the most common doctors – they earn around half that. Staff grades get close. consultants get a basic a chunk more than that

    Medical staff are not on those payscales they have their own payscales

    the other posts you mention are very few and rare. Most management is band 8a

    I bet its less than 5% of the NHS gets over £66000 pa.

    https://www.bma.org.uk/pay-and-contracts/pay/junior-doctors-pay-scales/pay-scales-for-junior-doctors-in-scotland

    https://nursingnotes.co.uk/agenda-for-change-nhs-pay-bands/scotland/

    Premier Icon cat69uk
    Free Member

    So, how much a month are we all working towards needing? I would say once mortgage gone, gas/leccy/water/council tax/mobile/tv/broadband/modest car/insurances that is £800 per month for a couple. £1,200 to £1,500 for a reasonable life? 2k, I dont know, no wonder people are confused. Totally understand everyone has a different definition to reasonable.

    Premier Icon Ro5ey
    Free Member

    Let’s try and get back on track and away from senseless NHS pay bickering.

    I had the morning off, walked the dog, had a run, a haircut and a spot of brunch before work.

    Looking forward to doing something like that more often .

    Premier Icon thepurist
    Full Member

    I’m about to take another step away from the rat race. I’m already on a 4 day week and wanted to drop to 3 next year but don’t think I can do my current job in that time. So I’ve proposed that I quit my current post and drop to 3 days a week in a new role (which I’m currently defining so I’ll make sure I keep the good bits and drop the hassle) and remain available to hand over my knowledge and experience to my successor. Boss is supportive of the plan and the new position will be on a fixed term contract so it’s a definite bridge to retirement.

    Premier Icon tjagain
    Full Member

    Let’s try and get back on track and away from senseless NHS pay bickering.

    Fair enough – I just get so fed up with people with no idea of the financial reality of most of the population and needed to correct the total misunderstanding of NHS pay rates

    Premier Icon cheddarchallenged
    Full Member

    “I’d expect at least 5 years out of a pair of boxer shorts”

    1,826 days use is pretty good going for a pair of boxer shorts.

    Premier Icon thepurist
    Full Member

    1,826 days use is pretty good going for a pair of boxer shorts.

    Remember you can wear them back to front and inside out, so that’s only 456 days on each bit of fabric.

    Premier Icon cheddarchallenged
    Full Member

    Andy4D makes a good point above on assumed returns and the calculators not mentioning draw down as an option.

    One of the most useful things I’ve read in pension planning is an article on drawdowns and guardrails. The logic seems pretty sound and there are a number of different well tested examples given. I keep meaning to knock up the rules in a couple of excel macros but haven’t got round to it yet.

    https://www.forbes.com/advisor/retirement/dynamic-spending-rules/

    Premier Icon cheddarchallenged
    Full Member

    Remember you can wear them back to front and inside out, so that’s only 456 days on each bit of fabric.

    or 3,652 days use out of a pair of boxers for the OP if he’s not already doing that 🙂

    Premier Icon 5lab
    Free Member

    So, how much a month are we all working towards needing?

    I think it depends on when you retire. You could be aiming for 10 years in retirement or 30 – for the former you’ll likely not have a hugely active lifestyle, and can make do without any big costs (car, kitchen, bathroom, roof, etc, are all unlikely to need doing in a 10 year timespan). 30 years is different, you probably need to buy at least a couple of cars, have the bathroom/kitchen redone, maybe some other expensive house stuff – maybe its only £2-3k a year to cover all of that (?) but it add a chunk to the overall.

    In addition, the earlier you retire the more likely you are to want an active lifestyle, with more travelling, going out, etc etc.

    I think we’ll aim for £3-4k a month for the household at retirement (hopefully mid-50s), I don’t mind if that doesn’t track inflation though as 20 years later I’ll probably be doing a lot less.

    Premier Icon flicker
    Free Member

    me and the good lady are doing very well on 20k between us. we had 60k between us when working. so how much money were we wasting ffs.

    I looked at our (mine and Mrs F’s, not mine and yours, that would be weird) outgoings a while back, one state pension would cover all household bills, food, and run one car and a couple of motorbikes, leaving the other state pension to spend on other things.
    When you remove outgoings like mortgage, pension, savings, loans etc then you don’t need a great deal to cover the basics.

    Premier Icon ton
    Free Member

    @flicker

    so true mate. and if you time is spent riding your bike and playing with grandkids, you spend very little.

    it is all about what you want to do in retirement.

    Premier Icon tjagain
    Full Member

    it is all about what you want to do in retirement.

    And the lifestyle you want

    From now until I am 67 I will have under £10 000 pa income ( but a chunk of capital)

    I will just have to cut my cloth accordingly to live on that sum and eat into my capital for expensive trips.

    Personally I am totally happy to retire now on that small income. But I do not need an extravagant lifestyle

    Premier Icon FB-ATB
    Full Member

    30 years is different, you probably need to … have the bathroom/kitchen redone

    One of the advantages of going to university- lived in some really bad places so a slightly tatty house is a luxury in comparison!

    Premier Icon Rio
    Full Member

    What’s the state pension currently, about 6k per year?

    £7,155.2 (£137.60 per week) at the moment.

    Current state pension if you’re fully paid up is £179.80 a week before tax, or £9.3k odd a year. Or at least that’s what DWP say I’ll be getting. Not something I ever thought I’d get as I’ve always planned on the basis that it would be abolished or means tested before I was eligible. Even after tax that should keep me in boxer shorts.

    Premier Icon poly
    Free Member

    Nope – hardly anyone person I have worked alongside will retire on anything like that. a medical consultant who did a full 40 years might get close. No nurse will get anything near that.

    the biggest NHS pension you can get is half salary. How many NHS workers earn over £66000 pa?

    Edit – thats wrong – pre 96 nhs pension holders can get to 45 / 80 of final salery. Now the most you can get is 45 / 60 of career average

    I think thats right but the point still stands – NHS workers like me and those I worked with will get nowhere near that.

    TJ – I wasn’t looking to start an “NHS pensions are great war” – but you’ve ignored state pension in your calculations. So your NHS colleagues either need an individual final salary of ~£42K (on 45/80) or a career average of ~£32k (on 45/60) without having any additional private pension. But the article also gave the numbers for a couple to be comfortable – which would require each person in the couple to earn £21-28k (depending on the scheme) working max years. That’s actually possible for even a couple of grade 3s who work for 45 years at current rates. Its certainly feasible for ward sisters, pharmacists, registrars, etc – these are not the pensions of CEO’s or fat-cat bankers.

    My aim was not to suggest that NHS staff had gold plated pensions or were in any way well paid – but rather to highlight that it’s not that exceptional to be able to get pensions that would meet the “comfortable” level if that is your priority, you stick it working as long as you possibly can etc, and milk it either with a late career set of promotions on final salary or getting up the ladder as quick as possible on career average.

    Premier Icon bullshotcrummond
    Free Member

    Plus don’t forget that the NHS pension is index linked – you would need an appreciable defined-contribution pot to be able to afford an equivalent index-linked annuity.

    And if you don’t buy such an annuity you then have to ride the risks of investing in the stock market and fighting the effects of inflation on your own.

    As this page points out (https://www.legalandmedical.co.uk/is-the-nhs-pension-scheme-good-value-for-money/) :

    “To gain the security of the NHSPS you would be taking so little risk your fund values would struggle to keep up with inflation.”

    and

    “We truly believe it would take either some extreme investment choices or high contributions to match the equivalent NHS pension. Not only is the NHS pension scheme still good value for money, importantly, a major part of your retirement planning is taken care of for you.”

    THey estimate that to get the equivalent of the 14.5% NHS contribution someone would have to be contributing 40.7% into a personal pension.

    Premier Icon tjagain
    Full Member

    Poly – and what yo have ignored is the reality it really is exceptional to reach those levels

    Most NHS employees never get anywhere near the theoretical max amounts because of career breaks – female dominated workforce, childcare. part time working

    Its almost impossible to get the full 45 years ( I am still not certain 45 years is possible anyway but cannot be arsed to check)

    Leave school at 18. take 4 years to train as a nurse – you would then have to work full time all year every year until 67 to get the 45 years

    doctors it would be 69 or 70 because of the longer training

    But most of us become physically and mentally unable to work that long. there is no way I could have gone on another 7 years

    A huge amount of NHS staff work part time 0- indeed full time contracts are rare nowadays

    so while in theory you can reach the levels ( still for a small minority of staff) in practice its rare indeed

    I was objecting to the claim that many of my colleagues will reach those levels – it will in reality be very few if any

    Premier Icon poly
    Free Member

    TJ – without knowing the individual circumstances of all your actual colleagues I can’t of course prove that many of them will – but it might be more than you think! Certainly, they have the potential if they decide to work full time and keep going as long as possible – you are quite right that women will be disproportionately less likely to have accrued full pensions – and the NHS does have more women than men – but the numbers are much closer to even amongst the higher earners. [45/80ths was certainly the rule in the old scheme, I’m not sure if its 45/60ths, but I also thought the newest scheme was 54ths]. Interestingly a career average scheme is potentially fairer on those who do one job for many years than those who climb the greasy pole to end up spending the last 3 years on the maximum possible salary just to get the best pension.

    The point of the article referred to (or at least the story behind the article) is to help people make informed choices about how much they need to retire with the lifestyle they want. Then they can decide if working part-time and its impact on your pension is worth it for the lifestyle benefit today versus the pain in the future; or if enduring working for another 5 years is worth it for the longer-term benefit of a more comfortable pension. I personally think it’s really helpful to see those numbers not just for an individual but for a couple (I don’t think I’ve seen anyone show them as a couple before – certainly my “IFA”* has never bothered to ask about my wife’s circumstances).

    What I can say with confidence is I know a number of NHS employees who certainly have the potential to get to those levels of pension. Pharmacists, Radiographers, Doctors, Senior nursing staff, managers etc. Given I believe you can “buy” extra years of pension not all of them will necessarily be working to 67 to maximise their benefits. Equally, some may have chosen private pensions, or have bought or inherited rental properties or holiday homes they’ve decided to invest in to get “pension” type income, etc – are those the norm – probably not – but people with individual £33K+ pensions, or household pension incomes of £40k+ are not purely the realms of bankers, CEOs and MPs – when you include state pension (especially two state pensions). IF “ordinary” workers want to get to those sort of pensions and act early enough they can get to those sort of pensions.**

    *he’s provided by my employer

    ** to be clear – I’m not being smug and sitting on a big pension. I wish at 19/20 I had listened to advice from a family friend that said to start saving for a pension , and I also wish I had understood final salary pensions and how special they were before I left a government job at 21/22! Some better decisions in my 20/30’s would have made it far easier to consider early retirement in my 50s , but like most young people it all seemed so far off.

    Premier Icon thegeneralist
    Full Member

    For ****’s sake. Please can someone divert this conversation away from talk about investment and the dire state of the NHS and working life in general.

    I want people telling us about how they fill their later years with joy and fulfilment. How they wish they’d done it earlier. How little money they actually need.

    How they took up whitewater kayaking again in retirement for the first time in 25 years. Because they had much more time available, and could padle when the rain came they quickly got back to the level they were at in their thirties. The fact that they lived in the Lakes rather than Altrincham gave them excellent access on good days.
    That the regular trips meant that they could hone their skills and maintain a level of competence that meant that they were no longer the weakest in the team and most likely to die.
    About the fact that they no longer had to do loads of short weekend trips to feed the rat, so saved enough money to make a 4 week trip of a lifetime down the grand Canyon feasible. Without thinking they’d die on Lava.

    Please someone, tell me about that…

    Premier Icon tjagain
    Full Member

    TJ – without knowing the individual circumstances of all your actual colleagues I can’t of course prove that many of them will – but it might be more than you think!

    Poly =- I was told many of my colleagues will rench those levels. I know they will not and cannot. I could give details but you like many others vastly over estimate the numbers who can reach those levels
    Please stop telling me that what I KNOW is wrong.

    I could go on with details but I think this bickering has diverted the thread long enough. Just take MY assurance that the people I worked with from medical consultants to cleaners will not because of part time working and career gaps

    The only NHS emplyees that will reach those levels are full time consultants and very senior staff – not ordinary working radiographers, nurses etc. Not even band 7 charge nburses

    also I certainly could not buy extra years – I tried

    Average NHS pension is £8000 pa IIRC

    Premier Icon bruneep
    Full Member

    Looked at buying extra yrs for mrsb’s NHS* pension, the sppa wanted £50K. No way were we dumping that into her pension. Yes you can buy extra yrs but the cost can prohibitive

    * she works PT band 6

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