Year of the pensions CRUNCH: 2027 apocalypse

mystic_trev

Generali wrote: »

...if they haven't had to be sold or had all the equity borrowed in the meantime of course.

Many Baby Boomers are going to end up getting stiffed for the pension that they think they're going to get.

...and there lies the rub!

A majority of my fellow boomers are asset rich but cash poor. The large family homes they own are fine whilst they're still working. However, once they're retired, they'll need to downsize for several reasons. They'll need to unlock cash to supplement their Pensions and they won't be able to stay in 'expensive houses' due to running costs, expensive gas, electricity and Council Tax. As you rightly say, many boomers approaching retirement are in for a shock when they find out what their Pension will be!

kabayiri

mystic_trev wrote: »

...and there lies the rub!

A majority of my fellow boomers are asset rich but cash poor. The large family homes they own are fine whilst they're still working. However, once they're retired, they'll need to downsize for several reasons. They'll need to unlock cash to supplement their Pensions and they won't be able to stay in 'expensive houses' due to running costs, expensive gas, electricity and Council Tax. As you rightly say, many boomers approaching retirement are in for a shock when they find out what their Pension will be!

Didn't you catch the news slot on last weekend breakfast telly ?

Cue cozy scene of Grampy living alongside his offspring and their grown up children, all in the one "multi-generational" home.

I can see it now. Grants and tax breaks for those who have 3 or more generations under the same roof. It will become the cultural and moral norm to look after our grandparents at home.

Sapphire

kabayiri wrote: »

Cue cozy scene of Grampy living alongside his offspring and their grown up children, all in the one "multi-generational" home.

It will become the cultural and moral norm to look after our grandparents at home.

This is the cultural and moral norm in many societies – and used to be in this one. No bad thing in many ways, since it helps the generations to understand and value each other, and to learn from one another. British society has become very selfish and fragmented.

HAMISH_MCTAVISH

kabayiri wrote: »

Grampy living alongside his offspring and their grown up children, all in the one "multi-generational" home.

I can see it now. Grants and tax breaks for those who have 3 or more generations under the same roof. It will become the cultural and moral norm to look after our grandparents at home.

There is such a severe and worsening shortage of housing that a significant increase in multiple households living under one roof is now inevitable.

And it won't only be "multi-generational" sharing situations.

Prices will rise until sufficient people are forced to share that housing need and housing supply are equalised.

And with the UK adding almost a million more people every 2 years, but building fewer houses than at any time since the 1920's, this situation will get far worse before it gets better.

Graham_Devon

HAMISH_MCTAVISH wrote: »

There is such a severe and worsening shortage of housing that a significant increase in multiple households living under one roof is now inevitable.

And it won't only be "multi-generational" sharing situations.

Prices will rise until sufficient people are forced to share that housing need and housing supply are equalised.

And with the UK adding almost a million more people every 2 years, but building fewer houses than at any time since the 1920's, this situation will get far worse before it gets better.

And there we have it. Why Hamish want's more immigration

ruggedtoast

Only another fifteen years to wait then.

HAMISH_MCTAVISH

Graham_Devon wrote: »

And there we have it. Why Hamish want's more immigration

You're so one dimensional it's ridiculous Graham.

We need more immigration for economic growth and to ensure we don't invert the demographic pyramid.

That's more important by far than house prices.

Yet you seem to be willing to jeapordise the long term stability and prosperity of the country, just to try and hold house prices down for a few years now.

Why?

sjaypink

HAMISH_MCTAVISH wrote: »

Option 1. Starting tomorrow, we'll freeze immigration, but you need to pay 30% of your income in National Insurance payments for the next 50 years, in addition to the current levels of income and consumption taxes. This lets us pay for the current burden, plus make provisions for you in your retirement, so that future generations need only pay for themselves.

By the time you reach 75 or 80, we'll be caught up on the retirement burden front and future generations will only need to pay for themselves, so population can fluctuate up or down with little impact to retirement costs.

....and after that?.....

Option 2. We can expand population and achieve the same thing but with everyone paying far less.

....and after that?...

Surely that's the interesting bit! & what we should be basing our answers on?

Oh actually fuck it, we'll be dead then - somebody else's problem!!

michaels

Stepping back.

We will have more older people looking to turn assets in to cash as income from inadequate provision private pensions and demographic constrained taxation transfer will be insufficient.

We will also still have a housing shortage due to population growth and insufficient house building.

The asset liquidisers will still need to live somewhere so presumably will be pushing up demand of smaller properties.

Net result may be a narrowing of the gap between different property sizes and labour may be gaining a bigger share of national income at the expense of capital, so a reverse of what has been happening for the last few years.

How big will the effect be? I haven't a clue.

vivatifosi

There's an interesting article in this week's (ie the one that finishes today) Economist about pensions in the UK and US. The long and the short of it is that it talks about how pensions have been reliant on share prices for longer term gain (many US local govt pension funds are based on an 8% gain in share prices pa). It then goes on to argue that this may be proved to be due to the circumstances of the time rather than a long run truth and that pension funds need to consider such going forwards. Therefore an individual who previously saved 10% of their salary for their pension in more risk-based assets would need to save 20% of their salary (but would be able to use less risky vehicles) in the future.

http://www.economist.com/node/21550307