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MSE News: Generation 'not saving for retirement'
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I'm not in the company pension scheme because I can't afford to be
Most company pension schemes require a percentage of your income. So, if you are a low earner, the contribution will be low as well. Most schemes tend to be around the 3-5% mark to get the employer contribution. the percentage is also stated before tax relief so in reality, its not as high as that.
lets take the most common contribution figure of 5%. Lets pick a low earner on £15,000. 5% of £15k is £62.50pm. However, with tax relief, the cost is actually £50pm. Whilst there will be some who are in extreme poverty and cannot afford it, that will not be the case of the majority.
Not so many years ago, a first time buyer would move into a house and get given second hand furniture from the parents and have most rooms barely furnished and move on upwards over time. The credit boom saw first time buyers borrow money to get it all now. Those monthly payments on credit are often the reason why things are not affordable (along with all the consumer goods).
There was a programme on ITV a couple of years back about how people couldnt afford to save for retirement. One of the people they spoke to sat in their lounge and behind them were shelves full of DVDs and Xbox game (hundreds of them). It told us all we needed to know about that person.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
clockworkpurple wrote: »Generation 'not saving for retirement' because generation 'can't bloody afford it'!Generation can still afford one or two overseas holidays a year, luxury consumer goods and meals out regularly.
It's a question of priorities, isnt it?
Dunno about you, but we certainly can't afford those.:heartpuls Mrs Marleyboy :heartpuls
MSE: many of the benefits of a helpful family, without disadvantages like having to compete for the tv remoteProud Parents to an Aut-some son
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So they're encouraging us to put more money into pension schemes so they can cream off their extortionate charges for doing !!!!!! all. True you do get a big chunk of tax back, but it immediately starts getting eroded by fees and inflation. Great.
Pensions used to have very high fees, but this has changed over recent decades. You can now get well under 1% a year, and 0.5% is easily achievable. As for inflation, you don't usually invest in cash in a pension, or at least no more than a small percentage. Instead you invest in bonds, equities, and other more esoteric vehicles, usually via a "balanced" or "cautiously" managed fund. As a result, you can use growth of 5% or 7% a year in your financial planning.
Yes, there's a degree of risk, and sacrifices to be made, but surely this is better than just frittering it all away and spending decades in poverty?I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »Pensions used to have very high fees, but this has changed over recent decades. You can now get well under 1% a year, and 0.5% is easily achievable. As for inflation, you don't usually invest in cash in a pension, or at least no more than a small percentage. Instead you invest in bonds, equities, and other more esoteric vehicles, usually via a "balanced" or "cautiously" managed fund. As a result, you can use growth of 5% or 7% a year in your financial planning.
Yes, there's a degree of risk, and sacrifices to be made, but surely this is better than just frittering it all away and spending decades in poverty?
You can get 0.2% on pensions now. The days of high charges on pensions are gone. If you still paying high charges then its because you are choosing to do so.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I am almost 23 and have been paying into my pension for a number of years. I am in debt. Can I access it to pay off my debts?
All joking aside, it's quite sad when I see this because it makes me think that although I am going to be saving for my retirement, if others don't, surely benefits for retirement will come back and future generations will have to pay for this.0 -
If you haven't got it you can't save it! I'm not in the company pension scheme because I can't afford to be, all my wages go on day to day living expenses. I don't have a luxury lifestyle either, last foreign holiday 1999, last UK holiday 2005, £10.00 a month on a pay-as-you-go mobile for emergencies, got rid of Sky TV in 2007, and I don't have a car. Any savings I do manage to get together go on exciting things like getting the gutters repaired and replacing the washing machine. And I'll bet that I'm not the only one in this position, for a lot of people it really is a case of can't save, rather than won't save for retirement.
I agree with you there are a lot of people who cant save, but then there are a lot of people who can who dont? As somebody else has put on here (think it was Dustonh) about a £15k salary saving £50 into a pension, although it isn't a lot far too many people think it just isnt worth it when it clearly is? I know far too many people who live for today and not worry about the future, and there are many of the same generation who are influenced by this 'group'.
Stepping back from that though, I'm often bewildered by some mates or work colleagues who are always 'skint'? It does make me wonder what exactly they do with it???????Millionaire in Training
Mortgage: £27,535 (49% paid) Aim £25,000 by December 2015
New House Mortgage £197,836 (4% Paid) Aim £194,000 by December 2015
#153 Save 12k in 2015 Challenge: £15,697£12,0000 -
Indeed, bang on!
It's all very well critising people for not doing more to save for their retirement... BUT when you're already on a low income and are struggling to meet paying PAYE, NI, Pension, Rent, Council tax & all the other generic essential living costs, it's almost impossible to save anything.
People who come out with rubbish are looking from it upon a cushioned existence from a very comfortable income, they're a bit removed from the reality of other people.
If you're income is as low as you are trying to make out, then you won't be paying much PAYE or NI.
I grew up with a single parent who didn't earn enough to pay any PAYE or NI, yet I could identify plenty of places where cuts could be made to fund a pension plan. It's just a matter of whether you want to or not.
The problem we have today is people on low incomes live as if they don't have low incomes. They want the "luxuries" etc. that others have. Whereas before, people would just go without.
It's not nice to not be able to have what others do - I know that more than most. But at the end of the day, it's your choice - a comfortable retirement or a more comfortable now.0 -
Do you smoke? Do you eat out? Do you buy lottery tickets? Do you have hobbies?
Life is about making choices. I don't believe for one second that people aren't able to put money away for their retirement: we have forty years of working life to plan for it, and if you use those forty years it is a tiny commitment.
I don't smoke, eat out at birthdays and Christmas, don't do the lottery, but yes I have a hobby :eek: - not an expensive one though. Yes, life is about choices, but how realistic is to think that someone will do without any form of entertainment or enjoyment for the 50 years of their working lives (or even for 15 or 20 years) so that they can save every spare penny for their pension. That's not living, that's existing.
Hi Dustonh - I do understand how the pension scheme works (I have a small company pension from a previous job) but that £50.00 a month is just not affordable for me. Why not? Well because that £50.00 is my fares to work for a month, a week's grocery shopping for the family, the monthly saving for the electric bill or any one of a dozen other things that have to be paid now.0 -
To be fair to a lot of people on low incomes, with the means tested pensions we have now, saving for a private pension doesn't make sense. If the flat rate comes in, then they'll probably be kicking themselves for not doing something, but you can only make decisions based on what you know and/or can reliably predict.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I don't smoke, eat out at birthdays and Christmas, don't do the lottery, but yes I have a hobby :eek: - not an expensive one though. Yes, life is about choices, but how realistic is to think that someone will do without any form of entertainment or enjoyment for the 50 years of their working lives (or even for 15 or 20 years) so that they can save every spare penny for their pension. That's not living, that's existing.
Hi Dustonh - I do understand how the pension scheme works (I have a small company pension from a previous job) but that £50.00 a month is just not affordable for me. Why not? Well because that £50.00 is my fares to work for a month, a week's grocery shopping for the family, the monthly saving for the electric bill or any one of a dozen other things that have to be paid now.
I agree, for a young family that can make a difference? again its the 'group' of people, one of whom I know budgets £300 a month for food bills (single person). You say that £50 can feed your family for a week so gather £200 a month, you could wonder where my mate puts it? I wonder that too as me and the missus manage easily on £100 a month, thats buying sensible fresh produce that we can create several meals from.Millionaire in Training
Mortgage: £27,535 (49% paid) Aim £25,000 by December 2015
New House Mortgage £197,836 (4% Paid) Aim £194,000 by December 2015
#153 Save 12k in 2015 Challenge: £15,697£12,0000
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