Indexation

bendix

CLAPTON wrote: »

........ Bendix

you have posted several items that I would normally have pressed your 'Thanks ' button; however for whatever reason it is missing on your posts although it exists for other poster... I've no idea why

It's ok CLAPPY old chap.

I don't do it for the thanks. I do it because I'm such a kind-hearted, tolerant, easy-going kinda guy, eager to share my nuggets of wisdom in a supportive, nurturing way with everyone else.




I'll get my coat . . . .

CLAPTON

bendix wrote: »

It's ok CLAPPY old chap.

I don't do it for the thanks. I do it because I'm such a kind-hearted, tolerant, easy-going kinda guy, eager to share my nuggets of wisdom in a supportive, nurturing way with everyone else.




I'll get my coat . . . .

well, modesty gets it's own rewards as magically the thanks button has re-appeared

sandsy

Most pensions calculators assume that pension contributions will increase in line with earnings inflation which tends to exceed increases in price inflation (historically, by about 1.5%-2%)
Typically, they'll use earnings inflation of 4% which is in line with the FSA intermediate projection rates.

So if you're investing £168 this year, it would need to go up to approx £175 next year.

village_life

CLAPTON wrote: »

lets do a simple 'order of magnitude' calculation

base everything in real terms i.e. excluding inflation

now if 168 (pm) is 3% of your salary then presumably you earn 67,200 per annum

if your employer adds 3% then over 38 years then you will have saved
67,000 x 6% x 38 = 153,000

now lets say you buy an annunity inflation linked at about 4% per annum that would give you an annual income of 6,180 per annum
for a person used to earning 67k pa I would have thought 6k wasn't very much although you will have the state pension of say 5k and maybe the second state pension of a similar amount


frankly you are paying far to little to say get anywhere near half your salary as a retirment income ... think nearer total contribtution of 20% of your income.

Your maths is correct, my core salary at the moment is £67k per year. However I dont expect to get anywhere near to £67k per year (or half that) in retirement, as at the moment my salary is spent on mortgage, nice holidays, normal bills, insurance, and a good lifestyle..... in retirement my expectations are much less for pension provision.

In my mind I was thinking of somewhere between £20-25k pension in retirement, my state pension and second state pension should come in at ~£10k pa?, so I'm looking to make up £15k via my own provisions.....

W.R.T 20% of my salary, there is no way on this earth I am able to put aside £1k per month into a pension pot, let alone one thats not guaranteed to see that investment return - I'm still at the mercy of the markets whether I contribute my 3% or 20% of salary.....

surely noone else here is contributing 20% of their salary into pension provision.... are they?

Linton

I contributed the maximum the law permitted at the time (15%)... and was able to retire at 56.

Bearing in mind at your salary level it's all coming out of the higher rate tax band I would seriously suggest that you cut back a little on the good life and put a lot more into the pension. Plus of course you need to build up your non-pension savings

village_life

Linton wrote: »

I contributed the maximum the law permitted at the time (15%)... and was able to retire at 56.

Bearing in mind at your salary level it's all coming out of the higher rate tax band I would seriously suggest that you cut back a little on the good life and put a lot more into the pension. Plus of course you need to build up your non-pension savings

LOL - How much is "a little off the good life"....
TBH I took the last set of posts (only just checked since yesterday) quite to heart..... here I am doing what I can to make plans for my retirement, and the constant feedback is that your not doing enough.... yet I know of people, and I see people posting who are 30,40+ without a bean saved in a pension - so surely I am better off than them!

TBH I have only REALLY started to focus on this in the past couple of months, previously I contributed to a company scheme and my employer matched it, and I thought that given I was contributing ~£200+ per month total, that that was a *good* level of contribution and I'd be *OK*.... I am now taking a more conscious effort to plan ahead.....

However, saving 20% of my salary as pension for a 30 year old is unrealistic surely..... After tax I take home ~£3,500, my mortgage is £1k, my other household bills are £1k, I overpay my mortgage to the tune of £450 per month, I'm saving for a flash holiday next year to the tune of £400 per month (surely thats *acceptable* for someone of my level of earnings!), so in reality there isnt a vast amount left after accounting for living expenses etc.....

Currently I have no other "non pension savings"but the plan is to attack the mortgage, then get a second property as a boost for retirement - whether kids get in the way of that plan remains to be seen.....

I want to take away the *gamble* of retirement by contributing at a decent level, however not at the expense of chopping out the luxury of what my salary gives me in terms of lifestyle, in pursuit of notional wealth in retirement which A) i may never see, may never be realised etc etc......

Any other thoughts with that in mind?

Linton

village_life wrote: »

LOL - How much is "a little off the good life"....
TBH I took the last set of posts (only just checked since yesterday) quite to heart..... here I am doing what I can to make plans for my retirement, and the constant feedback is that your not doing enough.... yet I know of people, and I see people posting who are 30,40+ without a bean saved in a pension - so surely I am better off than them!

TBH I have only REALLY started to focus on this in the past couple of months, previously I contributed to a company scheme and my employer matched it, and I thought that given I was contributing ~£200+ per month total, that that was a *good* level of contribution and I'd be *OK*.... I am now taking a more conscious effort to plan ahead.....

However, saving 20% of my salary as pension for a 30 year old is unrealistic surely..... After tax I take home ~£3,500, my mortgage is £1k, my other household bills are £1k, I overpay my mortgage to the tune of £450 per month, I'm saving for a flash holiday next year to the tune of £400 per month (surely thats *acceptable* for someone of my level of earnings!), so in reality there isnt a vast amount left after accounting for living expenses etc.....

Currently I have no other "non pension savings"but the plan is to attack the mortgage, then get a second property as a boost for retirement - whether kids get in the way of that plan remains to be seen.....

I want to take away the *gamble* of retirement by contributing at a decent level, however not at the expense of chopping out the luxury of what my salary gives me in terms of lifestyle, in pursuit of notional wealth in retirement which A) i may never see, may never be realised etc etc......

Any other thoughts with that in mind?

Think about the higher rate tax. If you switched all your mortgage overpayments into pension, with the tax relief, you would be at about the 15% contribution level.

Much more I could say - but perhaps Bendix could say it more, errr, pithily.

village_life

Linton wrote: »

Think about the higher rate tax. If you switched all your mortgage overpayments into pension, with the tax relief, you would be at about the 15% contribution level.

Much more I could say - but perhaps Bendix could say it more, errr, pithily.

I dont know what pithily is, but it doesnt sound very nice!

I could move my mortgage overpaymnet into the pension,however mortgage overpayments are actually providing something REAL, I can see my mortgage fall month on month, and it is a gateway to buying a second home in the future and hopefully mitigating the risks associated with pensions by having a *solid* investment.....
i could put an extra £450 per month into a pension, but then its locked in there for 30 odd years, and if we happen to have a recession at the point i want to retire, then i'll have lost out even more!

i suspect those that do not concern themselves about pension provision currently will still be OK in the future, life seems to work out like that for the majority of people, so why do i find myself sat here worrying/contemplating my own future when I'm making *reasonable* contributions

I did a bit of googling and found the attached (other sites seem to support it)
"Research by [URL="Javascript: MM_openBrWindow('glossary.cfm#investment','glossary','scrollbars=yes,width=400,height=300')"]investment[/URL] specialists Flemings showed that a 25 year old starting a pension and investing £100 a month until 65 would eventually have a fund big enough to finance a pension of £25,000 a year."

... since I was 21 ive been contributing in total >£100 per month, and now its up at around the £300 per month level..... so based on the above I would usually feel pretty comfortable.....

Do people disagree with the figures given above? Is that just for additional pensions (i.e. non state).... I am pretty comfortable I could live on £25k pa in retirement if I had no mortgage and none of the other expenses that I directly attribute to my current lifestyle etc....

zygurat789

The old adage says "You can't have your cake and eat it"
Speaking as someone at the other end of retirement who can speak from experience total income in retirement of £20K is totally inadequate.

village_life

zygurat789 wrote: »

The old adage says "You can't have your cake and eat it"
Speaking as someone at the other end of retirement who can speak from experience total income in retirement of £20K is totally inadequate.

At an income of £67k pa (OK I've just started this job, but anyway) I consider myself very fortunate and at the higher end of mainstream income.... so surely that would afford me the ability to buy one cake for the future, and a second cake to nibble at in the present :-)....

interested in your final comment though - why is £20k inadequate? what do you think you'd be comfortable with in your retirement? what stage of retirement are you at (i.e how long in), whats your lifestlye factors that would make £20k inadequate as when I look at my budget, strip out all the things I wont need, then £20k seems like it'd do?