MSE News: Generation 'not saving for retirement'

in Savings & Investments
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  • ViolaLassViolaLass Forumite
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    RandomGuy wrote: »
    You don't say.

    Mortgage approvals fall to a new low... and economists warn it could get worse
    dailymail.co.uk/news/article-1391000/Mortgage-approvals-fall-new-low--economists-warn-worse.html

    The average home in England and Wales costs £161,000 – and the average buyer puts down a 26 per cent deposit.

    This means a typical buyer must find a deposit of about £42,000 when they buy a home, an amount which millions of families could never afford.

    These numbers aren't helpful. The average buyer includes a lot of people who are not first time buyers and who are therefore likely to have quite high deposits. To say that a first time buyers NEEDS a 26% deposit is patently not true since there are mortgages available for 10-20%. Round where I live, I could get a three bed house for £100k, meaning a 15% is £15k, a pretty manageable figure. Yes, £100k is cheaper than the average but if you think about it, you will realise that the majority of first time homes will be cheaper than the average home.

    RandomGuy, do you believe everything you read in the Daily Mail or do you consider the numbers presented to you and what they might actually mean?
  • ClowanceClowance Forumite
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    I have paid into company pensions all my working life but have moved jobs many times, not always by choice. I don't expect them to pay much. OH paid into a company scheme for 25 years then got made redundant, pays into another company scheme now. But we don't expect it to pay out much.
    We do have a foreign holiday once a year with our kids, I have a disease and a fam history which suggests I may not live to a ripe old age. We don't eat out/use the car much/frivolous spend on anything including clothes.
    My feeling is that you can be too concerned with the future and not live life in the now - you can't guarantee you will be around at retirement age, there have been reports saying that this generation will die sooner than their parents generation (I think this is based on unhealthy eating habits). You have to strike a balance.
    And of course pension schemes have been worsening their benefits from final salary to money purchase for some time now which hardly makes them attractive.
  • LoopgamesLoopgames Forumite
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    Clowance wrote: »
    I have paid into company pensions all my working life but have moved jobs many times, not always by choice. I don't expect them to pay much. OH paid into a company scheme for 25 years then got made redundant, pays into another company scheme now. But we don't expect it to pay out much.
    We do have a foreign holiday once a year with our kids, I have a disease and a fam history which suggests I may not live to a ripe old age. We don't eat out/use the car much/frivolous spend on anything including clothes.
    My feeling is that you can be too concerned with the future and not live life in the now - you can't guarantee you will be around at retirement age, there have been reports saying that this generation will die sooner than their parents generation (I think this is based on unhealthy eating habits). You have to strike a balance.
    And of course pension schemes have been worsening their benefits from final salary to money purchase for some time now which hardly makes them attractive.

    This highlighted statement is really important to note. DC benefits depend on the markets at the time of retirement. Although they move them to bonds in a sliding scale within 10 years of retiring. It's still not attractive imo.

    I personally believe that the best financial advisor is yourself - you have to make your own investment decisions at the end of the day and you know your circumstances better than anyone else. This could include investing in your own business or property or other investments that you feel you are confident you can make work.

    The pension industry is set up to make money from you - if you find you actually make money from your investment - woohoo - that's a bonus. You'll be lucky to get the same value of your money (taking account inflation).

    I remember putting money in all sorts of things including a friendly society and company pension scheme. Decided to change course and invest in things I understood rather than rely on others to invest on my behalf in areas I didn't understand so much or wasn't confident that it will provide the best return for my investment.
  • dunstonhdunstonh Forumite
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    Mortgage approvals fall to a new low... and economists warn it could get worse
    dailymail.co.uk/news/article-1391000/Mortgage-approvals-fall-new-low--economists-warn-worse.html

    Quote:
    The average home in England and Wales costs £161,000 – and the average buyer puts down a 26 per cent deposit.

    This means a typical buyer must find a deposit of about £42,000 when they buy a home, an amount which millions of families could never afford.
    So I guess I was wrong - I only need to save £1000 pcm for 4 years instead - plus I'll have an extra £6000 to put into savings at an interst rate that's well below inflation. I can see that comfortable retirement approaching already.

    You can easily spot the flaws in that article to see that it is presenting a sensationlist response.

    1 - it uses the average hour price. A first time buyer is not likely to be buying at the average priced house. They are likely to be buying a cheaper one.

    2 - it shows an average deposit but that doesnt mean you need that level. Lets take a £150k house. A 5% deposit needs £7500. A 10% deposit gives you greater mortgage choice and you need £15k. Thats a long way from the £42k.
    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.
  • ILW wrote: »
    Current policy seems to be to inflate away savings, so why bother?

    That's correct ... at whatever rate the building societies are offering the savings are worth less than when you started!

    So why bother indeed when your house, money and chattels are sold off anyway when you're old so some "entrepreneur" like Mr Duncan Bannatyne can make 70 million in ten years out of old peoples homes starting with just a few thousand for his first property. And this is up & down the country too.

    Really the cost price of renting a room to an elderly person with staff shouldn't be any more than about £50 per week tops. NOT £500 to £1500 in today's money. Yet the greed of these unmitigated owners actually want more? I suppose to make 50 million in 10 years you have to be banking after tax and expenses just under £100k per week ... now that's their wage OK. The average peoples home pulls in about £20,000 profit per week I reckon so 10 + homes should see you OK. Of course those with no assets the benefits agency will pay - talk about benefit scroungers! No wonder if you can make that kind of profit.

    The government can F off and we're about to be hit with another Tsunami of more foreigners from Serbia this time by the looks of it .. Mr Cameron can keep his big society.

    Virtually everywhere you go you see swarms and masses of ethic minorities soon to become majorities if they aren't already. And no one asked us either whether this was OK.

    Stash your cash quietly preferably offshore if possible and let them pay.

    As for pension funds - who's to say your gonna make it and the banks will have your money anyway. Also any pension provider can go bankrupt and some have ... what happens then?
  • dunstonhdunstonh Forumite
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    As for pension funds - who's to say your gonna make it and the banks will have your money anyway. Also any pension provider can go bankrupt and some have ... what happens then?

    1 - stats show that 4 out of 5 men will make retirement. So, good odds
    2 - If you dont make it, the banks dont get it. Banks dont even offer pension funds. If you have a money purchase pension (stakeholder, personal, SIPP, Group scheme and COMP/CIMP) then your nominated beneficiary is paid the full value as a tax free lump sum outside of the estate.
    3 - Please name a unit linked pension fund provider that has gone bankrupt.
    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.
  • Pension funds that have run into difficulty include:

    Robert Maxwells company pension fund.

    Equitable life

    and a number of pension funds that are paying less because they are compensating for miss sold endowments and other investments that didn't match the promises the financial advisors gave the customers.

    At this moment HBOS have been told to make amends for miss sold investments.
    Barclays bank have some similar issues I understand too.

    Not really a good advert for financial services is it?
  • ThrugelmirThrugelmir Forumite
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    Loopgames wrote: »
    This highlighted statement is really important to note. DC benefits depend on the markets at the time of retirement. Although they move them to bonds in a sliding scale within 10 years of retiring. It's still not attractive imo.

    What's fundamentally changing is acturial life expectancy tables. With longevity comes additional cost as the available pool of funding is spread more thinly.

    There is no other solution than to save more in some form or another.
    Real insurance claim quote : -

    "Going to work at 7am this morning I drove out of my drive straight into a bus. The bus was 5 minutes early.".
  • dunstonhdunstonh Forumite
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    Pension funds that have run into difficulty include:

    Robert Maxwells company pension fund.

    Equitable life

    and a number of pension funds that are paying less because they are compensating for miss sold endowments and other investments that didn't match the promises the financial advisors gave the customers.

    Maxwell's issue was nothing to do with money purchase funds. The issues caused by that brought in legislation to prevent it happening again.

    Equitable life had issues over the guarantees on their product linked to their with profits fund. Their unit linked funds had no issues.

    There has been no compensation paid for redress from any unit linked funds.
    At this moment HBOS have been told to make amends for miss sold investments.
    Barclays bank have some similar issues I understand too.

    Nothing to do with unit linked pension funds. Also, you are mistaken on what HBOS did wrong. It was about their complaint handling. Not the investments themselves. Barclays was mostly due to them incorrectly risk rating a fund.
    Not really a good advert for financial services is it?

    Only if you dont know what the issues were and only read the headline.

    However, I repeat, please name a unit linked pension fund that has gone bankrupt.

    People buying pensions today (or ISAs or unwrapped investments) mostly use unit linked funds (shares, ITs and ETFs being the other). So, if you are going to accuse them of going bankrupt, you need to provide evidence.
    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.
  • I like most of the people reading this site do so because money is tight.

    I am in the category of the poorer section that simply doesn't make enough spare to spend on pensions or investments so it would the mid section of society that pension funds would appeal to. i.e. people that aren't so wealthy that it's irrelevant or people so low in income that it's irrelevant.

    I would somehow expect many of the readers here to be in the lower section.

    OK you have queried my responses but many of us don't understand what linked funds in fact some of the pensioners that invested in Barclays "safe" portfolio lost more than 40% of their investment.

    Enough to scare many to "leave well alone".

    Sorry but I think you come from a biased standpoint especially with career prospects taking a risky turn, but the public are rightfully very wary of "investments", banks bankers and the various associated salesmen.
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