The Most Important Document You Will Never Read....

coastline

Theres no reason most employees shouldn't be saving £50 minimum into a pension scheme...with an increase for inflation yearly..
Over 45 years and gains of 5% pa you would have a pension pot over £100,000...which would return an annual pension around £6,000...
Together with the £7,000 state pension this would give most people a basic living in retirement without having to claim benefits..

RenovationMan

Graham_Devon wrote: »

It was a real world model. I don't know what you are asking me to come up with here?

Then fine, with your real world model, the guy had £384 left for 'spends' after all of his outgoings and after paying into a pension plan, which for a single bloke is a decent amount of money just to blow on nights out and partying. Which was pretty much the point that was made at the start of the conversation - prior to all the bleating about it not being a real-world example because his broadband is not included

Graham_Devon

RenovationMan wrote: »

Then fine, with your real world model, the guy had £384 left for 'spends' after all of his outgoings and after paying into a pension plan, which for a single bloke is a decent amount of money just to blow on nights out and partying. Which was pretty much the point that was made at the start of the conversation - prior to all the bleating about it not being a real-world example because his broadband is not included

Yes, that's fine. I never stated he couldn't pay into a pension. I was stating it would be difficult to save 4k after tax.

We both know that, we've been over it a couple of times now, yet you keep insisting on telling us about the pension element of it, which isn't what was being discussed.

We both agree a pension is easier, as it's before tax. That wasn't the point. You call me mr muddle, but you keep changing what we are talking about!!

RenovationMan

Graham_Devon wrote: »

Yes, that's fine. I never stated he couldn't pay into a pension. I was stating it would be difficult to save 4k after tax.

We both know that, we've been over it a couple of times now, yet you keep insisting on telling us about the pension element of it, which isn't what was being discussed.

We both agree a pension is easier, as it's before tax. That wasn't the point. You call me mr muddle, but you keep changing what we are talking about!!

We were talking about saving for retirement. To discuss that and not to mention the option of a pension, which is by far the most efficient way to save for retirement, is bizarre.

ISAS should be used for pension planning once you have filled your personal pension to the point where you will be paying tax on it. With zero state pension and an £8k tak allowance (and with 25% tax free withdrawal) most people would not be able to build up a large enough pension pot to pay tax and so would not require ISA savings.

To have an example where a bloke would save for retirement outside a pension might help with your argument about him not having sufficient cash to save for retirement, but it's not a valid case because pensions are available and that is what he would use. Why throw money away?

pqrdef

RenovationMan wrote: »

I'm getting over 10% with some of the investments in my pension at the mo.

OMG.

I did better than that on Premium Bonds, but if I hadn't cashed them in I think I know what the long term average would have reverted to.

Your guy is looking for a safe long-term average of 4.1% in real terms.

purch

The Most Important Document You Will Never Read....

.......has rapidly become the Least Important Thread You Will Never Read :eek:

pqrdef

coastline wrote: »

Over 45 years and gains of 5% pa you would have a pension pot over £100,000...which would return an annual pension around £6,000...

More fantasy figures.

Let's be generous and optimistic, since I'm in a good mood. Let's suppose that inflation is 3% and the return on investments is 2.5% more than that, i.e. 5.5%. The annuity pot is to be calculated on the same assumptions. How does it work out now?

RenovationMan

pqrdef wrote: »

OMG.

I did better than that on Premium Bonds, but if I hadn't cashed them in I think I know what the long term average would have reverted to.

Your guy is looking for a safe long-term average of 4.1% in real terms.

You are doing better than a 10% annual return with Premium Bonds? You'd better tell Martin Lewis because he thinks the return on premium bonds suck:

http://www.telegraph.co.uk/finance/personalfinance/savings/9304364/Moneyexpert-Martin-Lewis-reveals-the-seven-deadly-sins-of-NSandI-Premium-Bonds.html

"The reality is that at almost every turn, premium bonds disappoint."

"1.A paltry 1.5pc interest
NS&I lists its prize fund as an interest rate – a strange concept as you don't actually get interest, but instead are entered into a lottery to win prizes.

What it actually means is if you owned every Bond in existence, the prizes received over a year would be 1.5pc of what you put in. Thus for every £100 saved, you may expect an annual return of £1.50 – though, as I'll explain in a moment, you won't get it.

Even if 1.5pc was realistic, it's still only half the top saving's accounts rate, meaning even the fact its tax-free doesn't make up that gap – never mind when compared to the 3.2pc top-paying and also tax-free cash Isa. "

LOL, I can't believe you're trying to undermine my points on retirement saving and you invest in Premium Bonds. Delicious. :rotfl:

RenovationMan

pqrdef wrote: »

More fantasy figures.

Let's be generous and optimistic, since I'm in a good mood. Let's suppose that inflation is 3% and the return on investments is 2.5% more than that, i.e. 5.5%. The annuity pot is to be calculated on the same assumptions. How does it work out now?

Sorry, I can't take you seriously now. You invest in premium bonds! :rotfl:

"5.Even when you win you lose
The genius of premium bonds is that people feel they're winning, even when they're not. The reference to payouts as a win is possibly unintentionally psychologically devious.

You often hear people say things like "I've got £10,000 in and I win £25 every couple of months". Now that's actually slightly more than the odds predict. Yet put the same in a top savings account and you'd get a guaranteed 'win' of around £20 every single month.

Just because you occasionally win doesn't mean it's a good deal. "

kabayiri

pqrdef wrote: »

More fantasy figures.

Let's be generous and optimistic, since I'm in a good mood. Let's suppose that inflation is 3% and the return on investments is 2.5% more than that, i.e. 5.5%. The annuity pot is to be calculated on the same assumptions. How does it work out now?

And 45 years work?

Some of the industry sectors I have worked in didn't even exist 45 years ago.

In 45 years time your typical call centre agent is going to be built by Samsung licensed through Google.

I suspect we have to be a bit more conservative on how many years of work people will have under their belts.