Something that doesn't seem to get mentioned

RenovationMan

Graham_Devon wrote: »

That's the whole point of the plan as far as I have always understood.

Sell them, and the proceeds are your pension. BTL is a business, one which you don't want to be running in your dotage.

I'll let the BTLers answer that one. I couldn't be bothered managing BTLs now let alone in my dotage. Much easier to have shares, funds and bonds. I read on here that BTLs need new roofs and boilers every couple of years. Who needs that sort of hassle?

oldvicar

de1amo wrote: »

i wonder what percentage of working pay is considered reasonable(along with the oap)? given that the mortgage is paid off!!

I personally think its a lot less than commentators suggest.

In the personal finance pages you often read suggestions of ideally aiming for 2/3rds final salary, and how much a 30 or 40 year old needs to contribute as a percentage of salary. If they actually managed to save for that they'd be living off a lot less whilst working (with work related expenses and whilst paying a mortgage etc) than they would in retirement. Fine if your retirement plans are expensive (you'll have more time to indulge expensive hobbies etc), but otherwise a bit OTT.

I'd suggest that for median and higher paid workers (e.g. those earning approx £20K+) a good enough pension aim would be to have 2/3rds of AFTER TAX (ie take-home) pay*, but INCLUDING the basic state pension. More of course would be nice if its easily affordable whilst working.

However the elephant in the room will be the possibility of needing care in old age. Unless you have an exceptional pension, you might need not more pension, but a generous six-figure sum put by if you want any choice in the matter.

*EDIT: Assuming one buys an index-linked annuity (or at least a fund sufficient for one even if buying a different sort)

pqrdef

RenovationMan wrote: »

Do you stockpile food, just in case?

I don't see the public mood turning so ugly so quickly that I won't have time to get to Asda with the van.

The trouble with wealth is the difficulty of squirrelling it away from tax, inflation, haircuts, house price crashes, or whatever else they hit you with, especially if you also want it to appreciate or produce an income.

Jimmy_31

wannabehermit wrote: »

Taking my parents and myself as examples...

My dad - van driver, my mum - stayed at home, never worked.

DH - HGV driver, me - currently at home, trying to find work, applying for several jobs daily, only 2 interviews so far.

My parents - big house (bought for £37K) in a very nice area, one of the most expensive areas of the city.

Us - renting in a crap area of the city, if we want to buy we need to find £150K for a small house, a house like the one my parents had, about £300K

My parents - Lots of days out throughout all the holidays, all paid for by themselves.

Us - A few days out throughout the holidays, mostly paid for with clubcard vouchers

My parents - savings and investments all over the place, times nicely to have a payout every 5 years or so, plus my dad has about 4 pensions and he has paid very well into a pension for my mum. There are also several life insurance policies (3 that I know of)

Us - nothing. No disposable income to save or invest.

My parents - have helped me out immensely financially

Us - will never be in a position to help our children out in the way that my parents have.

In conclusion - my parents could afford to have 1 person on a normal, basic, unskilled job while the other stayed at home, they could buy a very nice house, have a good quality of life outside of work and save for the future. DH has a skilled job but I still need to go out to work, and still we won't be able to afford to save for a deposit on a house let alone save for our retirement. *I could substitute my parents for DHs parents or for my next door neighbours.

Another example is DHs wages. SInce leaving school he has had 3 jobs made redundant from the 1st 2 after about 6-7 years working for them, both companies folded so no payout), all same/similar skill level, the last and current job identical (except he now get a week less holiday, works 6hrs extra during the week plus works Saturdays)...

Job 1 - age 18 - 25 - take home pay approx £2,000 - £2,500 per month.

Job 2 - age 25 - 31 - take home pay approx £1,300 per month

Job 3 - age 32 - current - take home pay approx £950 per month.

15 years ago he was saving for a deposit, then paying approx £400 per month mortgage while doing the house up and saving further for a larger house. Now on less than half his income is having to pay £750 a month rent with nothing left over to save for a deposit.

So yes, ime disposable incomes are much lower now than they were 10-20 years ago. The above are facts not just me being whingy at not having a house & savings.

Good post.

Ive been saying similar things as you because i also live in the real world.

I have now been branded a troll by some other members

Cleaver

wannabehermit wrote: »

Another example is DHs wages. SInce leaving school he has had 3 jobs...all same/similar skill level

Job 1 - age 18 - 25 - take home pay approx £2,000 - £2,500 per month.

Job 3 - age 32 - current - take home pay approx £950 per month.

What job was he doing aged 25 that paid around £44,000 that requires the same skills as the job he's doing now that pays around £14,000?

Jimmy_31

Cleaver wrote: »

What job was he doing aged 25 that paid around £44,000 that requires the same skills as the job he's doing now that pays around £14,000?

Sounds like he works in the construction industry to me.

I could be wrong though.

vivatifosi

RenovationMan wrote: »

Let's hope that the short-lived pensions credit that was brought in by Labour will still be around when you retire. I personally think that the moves towards everyone having a full state pension will mean that pensions credit will be removed.

So fare we have seen the number of contribution years slashed from 44 to 30 to qualify for a state pension, meaning that more Mums can claim full state pension.

The government is currently looking at having a universal pension that pays a fixed amount regardless of how many years of NI contributed. They are unlikely to set a universal pension at the level when everyone receiving it is eligible for a 'topup' payment and other benefits.

I've had this same conversation with the advisors to the fund I'm a trustee of. It's a bit too early to tell, but there was consensus that the government will get people to opt out (relying on the fact most will stay in), give people a universal amount of money as a pension and if you haven't topped up and funds are tight, then tough.

Actually its not those in their 20s I feel sorry for here. They will be able to see this come into effect and plan accordingly. I'm more concerned about those already in their 40s and 50s with no pension provision who suddenly realise they're screwed. It will be a very different landscape in years to come if this gets taken to its logical conclusion.

Prudent

chucknorris wrote: »

Previously my attitude towards pensions was that I/we didn't really need one (although we do have minor pensions) as we would rely on our wealth in retirement. However last week it suddenly dawned on me that the best strategy is to avoid being the 'richest man in the graveyard' and actually spend most of it. But in order to do that you need substantial pension income as a hedge against living for much longer than you expect.

So I am going to change to plan B which is to buy pension top ups in the teachers pension fund. It seems like a good deal you can buy up to £5,600 per year pension for a lump sum of £69, 216 (this year). However I am surprised you can buy this much in one year as I would have thought this is over the 50k total pension limit, I need to look into this. Also I don't want to go under the 40% tax band when claiming the tax relief.

The downside of buying extra pension via the teacher's scheme is that you are tied to their retirement date. I looked into this too as I have enough to make a worthwhile purchase. In the end I have gone down the route of a private pension, isas and cash investments because it gives more flexiblity. You are also more vulnerable to the govt. changing the goal posts.

chucknorris

RenovationMan wrote: »

I do, but then I have always made sure that I contributed to a pension plan, even when I was earning a low income. I made it a priority in my financial planning as I am scared stiff of being in poverty in my old age.

I am not a BTL landlord but I believe the whole point of that strategy is to never sell the properties (so the price is meaningless) but instead to use their rental income to pay off the mortgage while the BTL landlord is working and therefore doesn't need the BTL income, and then to use the rental to fund a retirement (when the BTL properties are mortgage free).

I bought my first investment properties in 1991 (still have 2 of them plus a few more acquired later) I do intend to sell eventually because I don't really want to be hassled dealing with tenants when I am in my late 60's (I'm 53).

So an exit startegy is needed, it's not rocket science obviously you don't want to sell in a downturn, and you shouldn't be greedy and wait for the next peak (danger of missing it). But also you don't want to sell too soon, for example if properties were going up at about 6% PA that would mean about an extra 180k to us for doing nothing, so it's a balancing act between not wanting to be too greedy and not wanting to sell too early (probably a phased selling solution would be best, this would also make more efficient use of our CGT allowances). My best guess is that we will probably sell about 2022-2025 but that obviously depends upon the market.

chucknorris

Prudent wrote: »

The downside of buying extra pension via the teacher's scheme is that you are tied to their retirement date. I looked into this too as I have enough to make a worthwhile purchase. In the end I have gone down the route of a private pension, isas and cash investments because it gives more flexiblity. You are also more vulnerable to the govt. changing the goal posts.

As far as I know though I can still retire early if I feel the need and just wait until I'm 65 to actually take the pension (do you know if this is the case?). I don't actually need that income, I just think it's good value so I can afford to wait.

I don't think they could change the goal posts on how much you recieve once I have paid my lump sums (or at least I hope not).