Pensioners' loss of interest on savings

Austin_Allegro

IveSeenTheLight wrote: »

In your scenario, it would mean that the pensioner has £24k in savings, previously at 5% and now only getting 1%

This means they only earn £240 per year interest as opposed £1,200

the difference is £960 per year.

So in short, if they continued to maintain they're pension by £100 per month, Their savings would go down to £23,040 after one year

So they see their funds dwindling each year, but it would take 22 years to reduce the savings to just over £500. Unfortunate yes, but 22 years is a hell of a long time, especially as a pensioner.

But I doubt anyone expects interest rates to stay so low.
Lets assume interest rates go up to 6% in two years time.
Even though the savings is down to £22,070, the interest received would cover the £100 per month and start to increase the savings held.

Pensioners who have built up savings to cover them through their pension time have been prudent and understand there will be good and bad times during their pension life.

No one can honestly believe that the economy will run so smoothly during their entire time as a pensioner

Good point. As the banks and government fiddle wildly with the levers and controls of the economy, it's likely that they'll try pushing the interest rates up again sometime soon. Though they stayed around zero in Japan for about ten years I think.

Also, you can't take away the spirit of self reliance and independence that comes with being a saver. It's not just money, it's a state of mind, what Charles Long calls the 'conserver' mentality in his book 'How to Survive Without a Salary'.

beaujolais-nouveau

New_Gold_Dream wrote: »

Never really understood why pensioners have large sums deposited away, get it spent. Get down to benidorm, it is 22c there today, hit the san miguel and get on the dancefloor. Pointless working for years just to sit at home in telford freezing your toes off with massive amounts of money in the bank.

There are a great number of pensioners whose dancing days are long over. My 87-year-old mother has been in a nursing home since July 2005, unable to do anything for herself after a number of strokes. Before that, she wasn't doing much dancing because of osteoporosis (typical of people born in her generation). Due to strokes, she is at every minute in danger of choking so her money is all going on 24/7 nursing care, with registered nurses never more than 20 seconds away.

beaujolais-nouveau

IveSeenTheLight wrote: »

In your scenario, it would mean that the pensioner has £24k in savings, previously at 5% and now only getting 1% ... So they see their funds dwindling each year, but it would take 22 years to reduce the savings to just over £500.

You are not looking at this as if you were a pensioner. Capital is not for spending, unless on something unavoidable like replacing a boiler or having an operation to remove cataracts. If you have to spend your capital on daily living, you start to feel very anxious, if you are a pensioner because there is no way that you will ever be able to replace that lost capital.

IveSeenTheLight wrote: »

Pensioners who have built up savings to cover them through their pension time have been prudent and understand there will be good and bad times during their pension life.

Again, you are not looking at this from the viewpoint of an elderly person. The older people become, the more they need things to continue good - elderly people lose emotional resilience, as they become more vulnerable.

IveSeenTheLight wrote: »

No one can honestly believe that the economy will run so smoothly during their entire time as a pensioner

Pensioners can't refill their capital "cushion" so, yes, they need the economy to be run smoothly. Which, to be frank, is what the Government should do, instead of creating the conditions in which greed and recklessness are rewarded until the whole economy is brought down.

Conrad

Eggs and baskets as ever.

These greys shoulda put in property as well as cash. It's a subject I give quite a bit of thought to - where to invest my fund on retirment.

And as for those that have seen thier stock values fall, same reply - eggs and baskets.

beaujolais-nouveau

Conrad wrote: »

These greys shoulda put in property as well as cash.

My mother did - it is the proceeds of selling her flat (when she could no longer look after herself living there) that is funding her nursing now. But by no means every pensioner is in a position to do that. And, it has to be said, if we were trying to sell her flat now, the asking price would have to be much lower than it was in 2005. Which would have meant less money for her nursing care (cost currently £35,000 per year).

bubblesmoney

i remember reading somewhere that pensions arent taxed in france. dont know if this is true. if true might be an interesting option to explore for some even if the exchange rates have gone downhill

ess0two

Tough s hit.Bit like the other thread saying if people lose their houses tough s hit also.

kennyboy66_2

Generali wrote: »

Bit tough isn't it. The Luftwaffe rains bombs down on your house as a kid, you spend your teenage years in austerity and your kids bombard you with the bloody Beatles as an adult. You endure power cuts because of the unions in the 1970s and have to listen to a load of lectures from a Grocer's daughter through the 1980s.

You finally get to retire and just as you're starting to enjoy life, someone nicks your life savings in effect and gives them to a bank.

Alternatively,

You now don't have to worry about finding the money to go to the Doctors when you are ill. You enjoy 60 years of relative peace and although you have to do national service you spend all of your time in Catterick or Germany. You are healthier than the lardy !!!! people to day (by accident of rationing). You have you first holiday abroad. Your kids go to University (the first in your family) in 1980 and pay no fees and even get a full grant. The endowment you took out in 1976 to pay for your house actually not only covers the mortgage out pays you an extra £11k (oh yes).
You retire at 60, cashing your pension at the top of the market in 1999 to buy an annuity. You get a great deal as the actuaries have not actually caught up with life expectancys. You work part-time because you are fit and healthy.
As a poor pensioner you still manage a weeks skiing plus regular trips around the world.


ps - not a million miles away from a few people I know, who became electricians, plumbers or builders. Not a finally salary pension in sight.

Mary_Hartnell

Conrad wrote: »

Eggs and baskets as ever.

These greys shoulda put in property as well as cash. It's a subject I give quite a bit of thought to - where to invest my fund on retirment.

And as for those that have seen thier stock values fall, same reply - eggs and baskets.

And the reliable store of value is.........?
Presumably the cost of everything outside these shores is up 30% owing to the devaluation of the GBP ?

Sapphire

kennyboy66 wrote: »

Alternatively,

You now don't have to worry about finding the money to go to the Doctors when you are ill. You enjoy 60 years of relative peace and although you have to do national service you spend all of your time in Catterick or Germany. You are healthier than the lardy !!!! people to day (by accident of rationing). You have you first holiday abroad. Your kids go to University (the first in your family) in 1980 and pay no fees and even get a full grant. The endowment you took out in 1976 to pay for your house actually not only covers the mortgage out pays you an extra £11k (oh yes).
You retire at 60, cashing your pension at the top of the market in 1999 to buy an annuity. You get a great deal as the actuaries have not actually caught up with life expectancys. You work part-time because you are fit and healthy.
As a poor pensioner you still manage a weeks skiing plus regular trips around the world.


ps - not a million miles away from a few people I know, who became electricians, plumbers or builders. Not a finally salary pension in sight.

It's a million miles away from many people I know, who have been left almost destitute despite being prudent all their lives, and not engaging in the prevailing greed that has existed over the last few years!

Meanwhile those that are guilty of bringing down the economy around us get off scott free with their hundreds of thousands, millions or billions. It is immoral and wrong that such a situation exists.