Pensions Planning: The NUMBER

LHW99

Terron said:

As someone who remembers the 70s the idea of 2.5% inflation being high makes me smile.

For context on that, inflation in 1970 was 6.4%, and that was the lowest for the decade.

https://www.icalculator.info/inflation/historical-inflation-rates.html

Anonymous101

LHW99 said:

Terron said:

As someone who remembers the 70s the idea of 2.5% inflation being high makes me smile.

For context on that, inflation in 1970 was 6.4%, and that was the lowest for the decade.

https://www.icalculator.info/inflation/historical-inflation-rates.html

1972 - 1982 was a wild ride!
I was alive but can't remember anything about it other than what I've read since.

Imagine if numbers like that were to happen now.
Levels of consumer debt would have been a fraction of what they are today. Pretty scary really.

AlanP_2

Anonymous101 said:

LHW99 said:

Terron said:

As someone who remembers the 70s the idea of 2.5% inflation being high makes me smile.

For context on that, inflation in 1970 was 6.4%, and that was the lowest for the decade.

https://www.icalculator.info/inflation/historical-inflation-rates.html

1972 - 1982 was a wild ride!
I was alive but can't remember anything about it other than what I've read since.

Imagine if numbers like that were to happen now.
Levels of consumer debt would have been a fraction of what they are today. Pretty scary really.

Yes, But.


A friend at the time was 5 years older than me and got married in about 77 and bought a house.

He loved it when inflation went through the roof as he worked in a unionised workplace so got inflation+ payrises and his mortgage was falling in real terms hand over fist.

Fortunate timing I know but in every set of economic circumstances there are winners and losers in my experience. 

Anonymous101

AlanP_2 said:

Anonymous101 said:

LHW99 said:

Terron said:

As someone who remembers the 70s the idea of 2.5% inflation being high makes me smile.

For context on that, inflation in 1970 was 6.4%, and that was the lowest for the decade.

https://www.icalculator.info/inflation/historical-inflation-rates.html

1972 - 1982 was a wild ride!
I was alive but can't remember anything about it other than what I've read since.

Imagine if numbers like that were to happen now.
Levels of consumer debt would have been a fraction of what they are today. Pretty scary really.

Yes, But.


A friend at the time was 5 years older than me and got married in about 77 and bought a house.

He loved it when inflation went through the roof as he worked in a unionised workplace so got inflation+ payrises and his mortgage was falling in real terms hand over fist.

Fortunate timing I know but in every set of economic circumstances there are winners and losers in my experience. 

Yes absolutely there is... I imagine if that did happen now the triple lock might be under even more pressure!

SouthCoastBoy

I also remember inflation in the 70s and the economic mess surrounding it. I vaguely remember my dad being given a petrol ration book, but don't think it was ever used as not introduced.

I also remember the ridiculous high interest rates in late 80s and early 90s. Bought my first house in 91 sold it 4 years later at a 5% loss. I think that experience has stayed with me, as ever since 2001 I have been saying houses are overpriced and due to fall! How wrong was I!

So when I lack confidence in my current position and number I think it is all based on my experiences along the way, and if I stay in gainful employment I feel I have a chance to keep up with inflation etc. As soon as I leave employment the risk increases, as my number could suddenly shoot up.

Retireinten

I'm fortunate in that well over half of our retirement income is inflation proof and once we reach SPA the vast majority of our income will increase in line with inflation.

The biggest risk is that low growth/high inflation will impact my husbands DC. But I have two retirement income trackers, one uses no growth and one 1% growth, so I really just need his pot to keep pace with inflation over the long term to make our figures viable. 

We hold some cash (£40k) and I get that the buying power of this will reduce over time, but our food bill (our biggest bill by far) has already sky rocketed during lockdown.  Whether that's a lockdown thing, a 'two teenager' thing, rising prices or a combination of the three, I don't know, but as our retirement income is based on our current spend levels I'm hoping that when they fly the nest, the associated saving will more than offset any inflation rises. 

LHW99

The high inflation levels also meant that savings interest rates were high, which made it worth while to put most of the monthly pay into an instant access account, and pay absolutely everything possible by credit card, using the savings account to pay the bill each month. You could get quite a bit extra over a year compared with keeping it in a current account - even thoough those did pay a bit of interest.

Mind you, then there were mortgage rates .......

MallyGirl

Yes - I bought my first flat in 91 and the interest rate was 14%. There was a reason that the max multiplier of salary was 3 back then. Sold it at a loss some years later to buy a house with OH - I had rented it out for a bit but didn't enjoy being a landlord 

cfw1994

LHW99 said:

The high inflation levels also meant that savings interest rates were high, which made it worth while to put most of the monthly pay into an instant access account, and pay absolutely everything possible by credit card, using the savings account to pay the bill each month. You could get quite a bit extra over a year compared with keeping it in a current account - even thoough those did pay a bit of interest.

Mind you, then there were mortgage rates .......

The mortgage rates!

We were “with the Woolwich” for our first place, around 1990, & they only used standing orders.  

To change the payments you go had to go into the branch with the paperwork (nothing online then!).
We had to go in almost every month for a year: the rate went from about 7% to 12% - scary times.

Terron

AlanP_2 said:

Anonymous101 said:

LHW99 said:

Terron said:

As someone who remembers the 70s the idea of 2.5% inflation being high makes me smile.

For context on that, inflation in 1970 was 6.4%, and that was the lowest for the decade.

https://www.icalculator.info/inflation/historical-inflation-rates.html

1972 - 1982 was a wild ride!
I was alive but can't remember anything about it other than what I've read since.

Imagine if numbers like that were to happen now.
Levels of consumer debt would have been a fraction of what they are today. Pretty scary really.

Yes, But.


A friend at the time was 5 years older than me and got married in about 77 and bought a house.

He loved it when inflation went through the roof as he worked in a unionised workplace so got inflation+ payrises and his mortgage was falling in real terms hand over fist.

Fortunate timing I know but in every set of economic circumstances there are winners and losers in my experience. 

My Dad regretted having paid off his mortgage in the early 70s (£1500 from 1962). He was a GP and though they did get rises they were delayed a bit so our standard of living temporarily dropped a bit in the mid 70s, especially in 1975 when inflation peaked abover 24%.