I need a Pension!

tawl_2

apart from the financial incentives or lack of, i think there are other aspects to consider. i think sometimes we forget the real need of buying an annuity and concentrate too much on the financial aspects.

what if you outlive the average joe blogg? will you have enough savings or will you have to depend on the state or your children to support you and maintain your standard of living, sell your house? what about inflation? what will happen to your dependants when you die? what if the savings you have so well stashed suddenly dwindles because of fraud, recession or bad decisions? what if the state benefits reduce in the future? wouldn't it be nice to retire on an income you know is secure and known?

Life expectancy is increasing every time. No surprises as medical advances are ever prolonging life. We all now expect to live much longer. An annuity provides a guaranteed income for life. This can be financially liberating - allowing you to plan for the future safe in the knowledge that your payment is guaranteed. Once you purchase your annuity, that's it. Your income is secure and requires no expensive reviews. This allows you to invest more freely with your remaining assets to generate extra income on top of your annuity or to take action to pass more of your money onto your family.

those are fears some of us have (not all of us it seems) and why a pension can remove some of these fears. of course, if you won the lottery jackpot, no such issues!

Aegis

whiteflag wrote: »

You sure Aegis ?- I think youll find many self employed trades people, do the odd casher that might not go through the books!;)

True enough, I suppose...

dunstonh

The people I know who had to work a further 5-8 years the reason was annuity rates dropped through the floor, fact, not fiction and to say "They didn't pay enough in" to be frank is crap, they paid in the maximun they could afford, sorry but I must say that is a radiculous comment to say

You have to remember that inflation was double digits at the time as well as interest rates for a lot of that period. Inflation came down, interest rates came down and annuity rates came down. They also didnt drop over night. Anyone keeping an eye on these things would have seen it drop over the 10 year period.

Since 1999 they have been relatively stable with them going up and down slowly over the years. Currently we are at the same level as 2003. Last year was the highest level seen since 2002.

The most common "failure" with pensions is that people do not pay enough in. They start with £x amount per month but never increase it and think that it will still pay the same pension they thought it would. £50pm in 1988 was considered a good contribution. Now its a virtually a waste of time. A tank of petrol in 1988 was under a tenner. Now its £60. Yet many people are still paying the same into the pension.

wish I knew how to qoute sections as it will look like an essay.

go to the text you want to quote, hold your left mouse button down and drag it across the text. Right click and select copy from the menu. Then go to the reply box and right click and select paste. The text you copied will now appear in the box. Then select that text in the box and press the speech bubble icon. It will place quote either side of the text and thats how you get the quote to appear

whiteflag_3

Aegis wrote: »

True enough, I suppose...

Perhaps its why some self employed "dont believe" in pensions - the rules dont allow the investor the opportunity to fiddle the system.

sandsy

At 27yo, if you invest about 15%/16% of your income, you should end up with a pension about half your final annual salary, which will grow with inflation, and provide a 50% spouse's pension, based on standard projection assumptions.

The later you leave it, the more it will cost, eg. leave it until 40yo and you'll be looking at more like 38% of salary.

Be prepared to take a long term view with your investment choice and ride out the ups and downs of the stock market until a few years before retirement.