Baby boomers struggle to pay off debts

MonkeySaving?

RenovationMan wrote: »

Straw poll, how many of us are really putting away adequate retirement provision?

I've put 8k aside for a trip to Dignitas, if it gets really bad.

mbga9pgf

If I had 8k, no wife (widowed say) I would use a 30p shotgun shell, after spending 7999.70p on high class young ladies of ill repute.

treliac

StevieJ wrote: »

I thought the BB's had been stealing from the young to amass great stores of wealth, mmmmm.

DD is always telling me about friends whose parents buy them cars, pay off their debts, buy them clothes, refuse to take rent contributions from them, etc, etc.

I tell DD they are not doing their kids any favours in protecting them from the real world. God knows how some of them will ever learn to stand on their own two feet.

(She always says, "Of course I wouldn't want to take all that"..... though I do detect a hint of envy!).


ETA: And I have heard that some of them are prepared to MEW so that they can continue to spoil their children. So it's hardly surprising that people are going into retirement still with considerable debts..... but not necessarily the time left or the income to service those debts.

.....

PasturesNew

RenovationMan wrote: »

Straw poll, how many of us are really putting away adequate retirement provision?

I've no pension. If I've nothing when I retire, then the current rates of Pension+Minimum Income's about £120/week - which is more than a lot of people earn if you remove housing costs and commuting costs.

For people on lower pay, whose employers haven't contributed, there's been no point really. I can put away £100/month every month starting now ..... and when I get to retirement age it'll pay out £100/month every month - and I'd lose £100/month every month from the top ups.

RenovationMan wrote: »

If you use 2/3rd of your current salary as a guide, in order to maintain your current standard of living and taking into account that you should be mortgage free and have no work-related expenses such as travelling, what are your figures?

Mine are:
Current income: £60,000 pa About £12k/year
Proposed retirement income: £40,000 pa About £8k/year

Current state pension forecast: £7871.76 No idea
Current personal pension forecast: £10,600 #1 None
Company FS pension forecast £24,166.67 #2 None

Total annual income from pensions: £42,638.43 About £6,200 state pension/top ups


Before anyone gets 'holier than thou' about this subject, why not run your figures through and see what you come up with. You could be in for a shock.

Right now I'm looking at rents and rent + basic bills would be about 70% of my income, commuting would be 10%, basic food would be 10% (£3/day). So, where would this mythical extra money come from? Especially as I've never had the spare and have been told there's no point/benefit to me doing anything.

If between now and then I stumble across extra money, all well and good. Otherwise, the state pension + top ups will do. I've never had a full life, hobbies, holidays, lifestyle, in the first place, so I've nothing to maintain.

lemonjelly

My initial response was a little tongue in cheek.

However, in the vein of many a true word is spoken in jest, it is a real problem. Consumer focus wales have recently published a report on this issue:
http://www.consumerfocus.org.uk/wales/files/2010/10/older_peoples_finances-FOR-WEB-2.pdf

Key findings are:
Consumer Focus Wales examines the extent to which older people are managing financially, and how their experiences differ to the rest of the population. The research details the realities of coping financial in the context of rising living costs for older people in Wales. Financing the future – a study of older people’s finance suggests that 42% of people aged over 50, particularly those on a low income or state pension, are already finding it harder to manage financially now compared to 12 months ago.
The report also reveals:
· 62% of over 65s are worried about being able to pay winter fuel bills and 22% are cutting back on their grocery bill to use cash elsewhere; and
· 14% of over 50s said they would put off retirement due to the economic climate, 53% said low interest rates had affected their income and 24% said their pension fund was lower than they expected.
The research also suggests that people in the over 65 age group are more likely to have savings put aside for a rainy day, to say they are good at budgeting and managing money and less likely to borrow money to fund their lifestyle than younger people.

Now, if this age range is more likely to have a savings buffer, and yet are still having to make cutbacks, what does that say for the rest of us & our ability to manage in a time of crisis?:eek:

lostinrates

lemonjelly wrote: »

Now, if this age range is more likely to have a savings buffer, and yet are still having to make cutbacks, what does that say for the rest of us & our ability to manage in a time of crisis?:eek:

To me...tbh...not that much. They have savings because they are used to living withing limits to save. It makes sense, in times when IR aren't great on savings...and you'd hope the mortgage is paid off so not much help there....that you'd cut back to avoid eating into the savings.

silvercar

RenovationMan wrote: »

Thats what everyone thinks, but the reality is somewhat different. You wont have a mortgage, national insurance, commuting expenses, but you will have everything else, with higher gas and electricity bills if you are spending more time at home. You will also need more money for recreation unless you intend just sitting in front of the TV day in and day out.

My two most expensive outlays are the kids and housing. With both those paid off by retirement (and the kids would be 34 and 30 by the time I'm 60 so I hope so!) I should be able to live on a much smaller income.

RenovationMan

PasturesNew wrote: »

I've no pension. If I've nothing when I retire, then the current rates of Pension+Minimum Income's about £120/week - which is more than a lot of people earn if you remove housing costs and commuting costs.

For people on lower pay, whose employers haven't contributed, there's been no point really. I can put away £100/month every month starting now ..... and when I get to retirement age it'll pay out £100/month every month - and I'd lose £100/month every month from the top ups.



Right now I'm looking at rents and rent + basic bills would be about 70% of my income, commuting would be 10%, basic food would be 10% (£3/day). So, where would this mythical extra money come from? Especially as I've never had the spare and have been told there's no point/benefit to me doing anything.

If between now and then I stumble across extra money, all well and good. Otherwise, the state pension + top ups will do. I've never had a full life, hobbies, holidays, lifestyle, in the first place, so I've nothing to maintain.

I may have the wrong person, so apologies if I have, but dont you have a large amount of savings from a house sale? Are you investing this wisely to gain the most from the investment or do you simply leave it in savings accounts, earning next to no interest?


Investment options include investing some of this in a BTL, rent it out for a few years and let the tenant pay down the mortgage. You then either have the option of taking over the BTL later in life as your home or continuing to let it out and take the rental as income.

There are a million other investments you could chose to give you an income, but as we are on the property board, I mentioned that one - plus it gives you a mortgage-free home at the end of the investment.

I would not make calculations on your state pension based on current legislation as things are changing dramatically. MIG for instance will probably be phased out as most people will qualify for a full state pension due to the reduction in the number of qualifying years.

quantic

My Granddad was a teacher, my gran was a hairdresser. They own (outright) a stone build 4 bed in a pretty exclusive area worth around £650,000. By comparison, my parents earn around £150k between them, and have a house worth about £450k with £150k outstanding on the mortgage.

I would say that my parents earn about 3 times what their parents did and won't be anywhere close financially by their age.

IveSeenTheLight

RenovationMan wrote: »

Thats what everyone thinks, but the reality is somewhat different. You wont have a mortgage, national insurance, commuting expenses, but you will have everything else, with higher gas and electricity bills if you are spending more time at home. You will also need more money for recreation unless you intend just sitting in front of the TV day in and day out.

It sounds like you have everything in place though with your retirement planning.

Expenses doesn't need to go up when you retire.
MEmbership of a golf club now will be cheaper in retirement and still be able to get me out of the house and away from daytime TV.

I'll probably do some other active stuff such as my father in law is doing.
He picked up an old childrens jeep for nothing and is doing it up.
Apart from a new battery and charger, most of the refurb is simply stripping it down, giving it a good clean . maintenance, reterminating wires etc at very little cost.
Very little cost but the rewards will be fantastic when he see's his grandson getting the benefits of his hard work.

I aim to do other similar things, take the grand children kite flying, to the beach, park. hill walking / camping etc, all free (currently )