Early-retirement wannabe

AlwaysLearnin

Marine_life wrote: »

This is potentially the subject of a very long thread...

This IS a very long thread...!

hugheskevi

I suspect that the western world is in a state of transition where actually we will on average become less wealthy (global wealth will increase but overall wealth will gradually transfer from Western to Asian economies).

I agree - we will probably be a lot wealthier in real terms, but will decline relative to other areas.

We will also have a real challenge to distribute the greater wealth, as there will be increasing number of elderly people many of whom will not have sufficient means to fund the level of health and social care they demand. Against a background of increasing income and wealth inequality there will be some very difficult policy decisions to be taken.

Back in 2003 the Pension Commission pointed out the 4 obvious things that could happen with regard to maintaining pensioner income:

1. Individuals could save more
2. People could work longer
3. Society transfers more to older people
4. Older people become poorer relative to the position of contemporary pensioners in society

Back then the suggestion of poorer pensioners, even in relative rather than absolute terms, was not considered a possibility by any politician. I think that was unfortunate, as pensioners were (and still are) very well off compared to previous cohorts of the elderly and there is quite a bit of fat that could be trimmed there.

With auto-enrolment, at least some individuals are saving more, although in aggregate the demise of final salary pensions has probably reduced overall saving.

Working longer is going to be the norm - retiring at 60 will be very early, and 65 will probably be seen as quite early. By 2020 State Pension age will be 66 and as the defined benefit pension legacy falls away, by about 2030 I think working and retirement patters will be quite different.

Far from society transferring more to pensioners, the single-tier reforms reduce the transfer but again focus on giving the bottom-end a bit more.

I think the overall consequence of all these changes will be future pensioners becoming relatively poorer, although working longer may be sufficiently powerful to offset this. The poorest pensioners will be protected, but I think there may be lot less distribution in pensioner income, with the income distribution clustered at a lowish level in the longer term.

All of which is probably quite a sensible way of managing change in a controlled manner, in my opinion.

Marine_life

atush wrote: »

Money is going east, but it went west to the americas before while britain's place in the world economy fell. Didn't mean the economy would not still grow.

It just means shifts which can be accounted for and predicted.

with an independent central bank, can't see us taking the same decisions as a more isolationist Japan.

To some extent I agree - but the problem is whether the political parties can make the right decisions.

I've spent a fair bit of time looking around here:

http://www.ukpublicspending.co.uk/

Scary stuff

ManofLeisure_2

Best Wishes on your Birthday, ML .

Thrugelmir

Marine_life wrote: »

Without getting into politics I think that is true.

Personally I believe it's an issue that needs a full airing. As extends beyond the lines of political divisions. Should be based on cross party review and recommendations.

Thrugelmir

hugheskevi wrote: »

Working longer is going to be the norm

Only if people are capable of doing so. Many will struggle to for a variety of reasons.

Bootsox

Thrugelmir wrote: »

Only if people are capable of doing so. Many will struggle to for a variety of reasons.

I often wonder how this is going to pan out, knackered 60/70 year olds trying to do physical/mentally demanding jobs that they may have just about wrestled with in their 40/50s.

It's a total nonsense.

Thrugelmir

Bootsox wrote: »

I often wonder how this is going to pan out, knackered 60/70 year olds trying to do physical/mentally demanding jobs that they may have just about wrestled with in their 40/50s.

It's a total nonsense.

Age will catch up with many people in their sixties for medical reasons. Even using a keyboard will be difficult for some.

kidmugsy

Bootsox wrote: »

I often wonder how this is going to pan out, knackered 60/70 year olds trying to do physical/mentally demanding jobs that they may have just about wrestled with in their 40/50s.

One advantage of the death of DB pension schemes - at least in those parts of the economy that create rather than consume wealth - is that it will be less awful for someone to continue to work, but in a more junior post and on a lower salary.

But I agree with your general point. We're not in our seventies yet, used to be sporty, never been big drinkers, gave up smoking forty years ago (and never smoked much in the first place) - and yet we're well aware of our frailties. Only too ruddy aware.

Broadsword

Of course later retirement is the Government's solution to funding longevity. It bears no relation to fitness to do any particular job. In the timespan there is unlikely to be a miracle youth extending drug that magically sweeps away the ailments that kick in from the 50's onwards. I was very fit all my life with no limiting ailments. Now at 66 I am reasonably fit for my age and while I could have continued in a demanding job as I was offered a whole new role as a Director of a large team at 65. I chose not to take it. It would have been too tiring, long hours became harder and I had had a few ailments that required minor surgery/ time off.

Back to the central question. What will happen is that careers will top out at the same ages but no state money will be on the immediate horizon to cushion ceasing work, or reducing to part time. Another reason to over-fund your pension in early times as you will be funding for yourself your income in the gap years, between ceasing or reducing work and state retirement age.