ISAs v Pensions: The Official Retirement Debate

fairleads

jem16 wrote: »

Avoidance tactics again.



Ok - I have checked my back room (or living room) and my front room ( my lounge), I have even checked my kitchen, bedrooms and bathroom just in case they are hiding there. However I can't find anyone - who should I ask now?



Finally I found someone to ask - Mr A and Mr B!

They said - "We haven't a clue - this bloke on the internet made us up! He sounds a wee bit like Mr MSE though so maybe you could try him."

Now perhaps you could give us your facts..............

Just as i thought, you haven't a clue.

jem16

fairleads wrote: »

Just as i thought, you haven't a clue.

Wrong again - that was Mr A and Mr B - aka fairleads.

However once again - avoidance tactics. Despite all this wealth of information and experience that you claim to have, you still don't provide any actual facts.

fairleads

jem16 wrote: »

Wrong again - that was Mr A and Mr B - aka fairleads.

However once again - avoidance tactics. Despite all this wealth of information and experience that you claim to have, you still don't provide any actual facts.

Of course not. It's intelectual capital

EternallyGrateful

I must confess I thought it was ALL getting a bit silly. At one point I was reminded of the Monty Python sketch - "This is not an argument it's just contradiction" ................. "Oh, no it's not!".

Let's look at the individual variables - in no particular order:-

We are differing ages
We hold differing views
We have differing requirements
We have various 'legacy' savings and funds
We are different sexes (i expect that's a quite limited choice!)
We can expect (or not) to receive our state pensions at differing ages
We will receive varying amounts of state pension (contracted in or not, qualifying years)
We will be either earning or not
If we are earning our disposable incomes will differ
We will be paying different rates of tax
We may have unused tax allowance
We are in different states of health
Etc. etc

I expect there are many more examples plus legislation seems to change almost daily.

Given those differences one size is never, ever going to fit all. So, whilst the recent posts have been interesting (OK I lied) I think that all any of us can do is offer advice based on our personal experience and knowledge which is pertinent to the specific questions raised on here.

jem16

fairleads wrote: »

Of course not. It's intelectual capital

Pity - your actual experience rather than your denigration of pensions and the financiial industry would have been much more useful to this thread.

fairleads

EternallyGrateful wrote: »

I must confess I thought it was ALL getting a bit silly. At one point I was reminded of the Monty Python sketch - "This is not an argument it's just contradiction" ................. "Oh, no it's not!".

Let's look at the individual variables - in no particular order:-

We are differing ages
We hold differing views
We have differing requirements
We have various 'legacy' savings and funds
We are different sexes (i expect that's a quite limited choice!)
We can expect (or not) to receive our state pensions at differing ages
We will receive varying amounts of state pension (contracted in or not, qualifying years)
We will be either earning or not
If we are earning our disposable incomes will differ
We will be paying different rates of tax
We may have unused tax allowance
We are in different states of health
Etc. etc

I expect there are many more examples plus legislation seems to change almost daily.

Given those differences one size is never, ever going to fit all. So, whilst the recent posts have been interesting (OK I lied) I think that all any of us can do is offer advice based on our personal experience and knowledge which is pertinent to the specific questions raised on here.

EG there aren't half as many variables in the retirement funding debate as the vested interests would have us believe. The industry has created an aura of mystic to the extent that Joe/Josephine public feel successful retirement cannot be achieved with-out regular consultations with their experts, and investment in their products. Unfortunately, the result of that could well be similar to that which befell our beloved McLaren drivers Sunday last. Either the wheels will come off mid-way thro' retirement, or we won’t have enough cash in our tank to see us through to the end. Tragic!
Yes and the Monty Python phrase brings another to mind - success depends more on a contrarian outlook than being contrary

EternallyGrateful

fairleads wrote: »

EG there aren't half as many variables in the retirement funding debate as the vested interests would have us believe. The industry has created an aura of mystic to the extent that Joe/Josephine public feel successful retirement cannot be achieved with-out regular consultations with their experts, and investment in their products.

I have previously asked "why does it all have to be so difficult?" In my view it's both the financial sector and the government who are to blame. But it is what it is and we have to work around it.
Last year I was told I was terminally ill with a liver transplant being my only hope. Therefore getting my finances straight was a priority. I consulted an 'expert' but only to cut through the first few layers of (I tried to think of a better word but still feel compelled to say) crap.
I then spent time at the PC using Google as my interface to the financial world. I also put together a spreadsheet going 10 years into the future - that's 120 rows so not very large or difficult. I am now 58 so that took me beyond NRD – as it is for me now anyway!
The spreadsheet has two reference points where I can change the rate of inflation applied or change the growth rate applied. I then entered our capital (myself and my wife) as it exists now – Pension funds, stocks and shares ISA’s, cash ISA’s, cash savings, and the forecast on a couple of endowments as they mature in several years time. I have analysed our spending for the last 12 months – food, utilities, etc, so I am able to use this as a forecast for future spending plus a monthly rate of inflation.
All of this enables me to have a target growth for my investments to meet my objectives. I am also able see where I am going to get my income from month by month – interest, growth or capital and to see what the tax implications are. Accordingly I am now thinking of taking a draw down from my pension fund (although I don’t need the money right now) just so I can use up my tax allowance and invest that income into a mix of S&S and cash ISA’s. That is rather than take the draw down when I need it but have to take twice as much which would make me liable for tax.
Basically it is a personal plan that suits me ….. nobody else! On the other hand the concept should suit anybody who is seriously interested in providing a comfortable future for themselves.
A final note: the whole thing took me about 12 hours and I now refer to it every week for 30 minutes or so.
PS. I had the liver transplant in November and am no longer terminally ill.

gadgetmind

EternallyGrateful wrote: »

A final note: the whole thing took me about 12 hours and I now refer to it every week for 30 minutes or so.

My spreadsheet took me longer than that but I was having to learn a lot of pension and tax rules along the way. Every year until retirement, I intend to copy the "10 year plan" tab to a new one, update projections with reality, and see where to go next. Just prior to retirement, I will consult someone (probably an IFA and accountant) to sanity check everything, and then start a whole new spreadsheet.

PS. I had the liver transplant in November and am no longer terminally ill.

Splendid!

gadgetmind

jem16 wrote: »

Pity - your actual experience rather than your denigration of pensions and the financiial industry

I try not to conflate the two. Pension are a beast that's defined by the regulations, while the financial industry tries to make money from people investing in pensions and otherwise.

The financial industry would like to take 100%+ of the money we invest and never give any back. All that stops them is regulation and the competitive nature of the market.

So, while I love pensions, I treat the financial industry like a nest of vipers, and generally let them skim off as little of my hard earned money as I can.

Things are getting better, with fees coming down, and transparency improving, but you still need your wits about you, as we see all too often on these forums.

Paul_Herring

gadgetmind wrote: »

Things are getting better, with fees coming down,

Except the crafty ones who put their fees up for their funds in expectation of the 'put your fees down' dictat.

Not dissimilar to the mortgage industry who put their rates up in expectation of a BoI reduction in previous years.