Don't know what to think about this attitude

elantan

atush wrote: »

First of all there is a sticky on page one.

Second, I said it there, and i'll say it here. It isn't either or. In fact they are both just tax wrappers. So you need Both!

So, add to the pension and while you are doing that, fill isas too.

Sorry as usual I don't make myself clear , yes I am aware it isn't an either or ... I am just very aware that everyone's requirement s are individual to themselves ... My decision on whether to pay more into my pension is ( for me anyway ) complicated ... Maybe I should start a thread hmmm

Thanks though I will have another read at the sticky thread

AlwaysLearnin

I've had similar conversations at work, although we (currently) have a DB pension so it's more they're saying they'll take their lump sums and draw their pensions at 55 (with actuarial reduction of 6% a year before 65!), not stopping their contributions though.

One particular friend of mine with this plan, who I've tried on more than one occasion to bestow the basic principles of saving for the future, earns more than me, but spends it. In contrast, we're currently living pretty comfortably well within our means, saving the rest in to pensions and ISA's. All going well the plan is that we use savings to enable early retirement, then at pension age take the inflation linked pension of an amount we're used to, meaning no/minimal impact on our standard of living. Fingers crossed :beer:.

I really don't think this friend appreciates/is ready for how much of a drop in income he's in for when his lump sum runs out, which it will very quickly if he tries to maintain his lifestyle. He's a big boy though, and I've tried. It may turn out that I need to get a little part time job, or I may not leave as early as I could after all, but I see it that I'm giving myself better options. It's all about choices.

Obviously nothing's certain, but I look at it that it's less today for more tomorrow

FLAPJACK

"I really don't think this friend appreciates/is ready for how much of a drop in income he's in for when his lump sum runs out, which it will very quickly if he tries to maintain his lifestyle. He's a big boy though, and I've tried. It may turn out that I need to get a little part time job, or I may not leave as early as I could after all, but I see it that I'm giving myself better options. It's all about choices."

Obviously nothing's certain, but I look at it that it's less today for more tomorrow




At least in retirement (even if you may need to work) you can think back and know that you did the best for yourself....unlike your friend who as you say will have a rude awakening when the lump sum runs out....he will have no such comfort of knowing he did his best.

It will be even more painful when the realisation settles in that he has wasted his future on the "now". Plus also the fact that he had someone trying to steer him right before it's too late.

As you say you tried.

Retirement should be the time of life when are truly your own boss and live life if not to the full....at least comfortably.....after all you didn't work all those years to end up eating beans on toast!.

I really do feel bad for those out there who will be in this situation in the future though....not because of their actions but as a result of how things are changing on the pensions front.

This fact alone should jolt people into doing something for their future security surely.

Of course there are those who may realise that they will not be happy in retirement.....seen a few of them, retire on Friday and Monday they are back in for lunch....then a couple of months down the line you hear they are no longer around...so for those maybe spending now is the correct thing to do?.

AlwaysLearnin

FLAPJACK wrote: »

so for those maybe spending now is the correct thing to do?.

Maybe, but as I say nothing's certain and that's not a risk I'm prepared to take. Worst case scenario is I don't make it, in which case it's just more money going to my family!

Re your comments re my friend, agree completely, I just didn't want to sound too smug...:D

FLAPJACK

Not smug at all.....nothing wrong in being sensible after all.

As for spending now....I agree with a family it's a silly risk to take.

All the best.

jamesd

The trouble with relying on benefits is that they are intended to be a safety net and you're at the mercy of whatever is thought to be sufficient for that in the future. And safety net is never likely to be a good level of income, just reasonable.

Those who like the safety net approach could usefully try living on the safety net income level for six months to see whether they can really do it.

atush

elantan wrote: »

Sorry as usual I don't make myself clear , yes I am aware it isn't an either or ... I am just very aware that everyone's requirement s are individual to themselves ... My decision on whether to pay more into my pension is ( for me anyway ) complicated ... Maybe I should start a thread hmmm

Thanks though I will have another read at the sticky thread

when reading up and considering your own situation, consider not just the tax relief you get with pensions over isas (ie they are worth more day 1). Look at your personal allowance. you will have one to use or lose, and it makes sense to use it up. If you have no other income from savings and investments over your pension and your State pension, then increasing your pension to get enough to use up your allowance makes the most sense. Money from isas is tax free, so won't use the allowance.

Isas come into their own in 2 ways, they can be accessed anytime so make an early retirement possible plus they give you access to capital in retirement if you need it.

atush

I really don't think this friend appreciates/is ready for how much of a drop in income he's in for when his lump sum runs out, which it will very quickly if he tries to maintain his lifestyle.

6% a year early reduction is brutal! Surely your friend knows that he will permanently reducing his pension by 60% to take it at 55? Can he live on 40% of the amt his pension will be at 65? If he is spending all now, probably not.

If no one has asked him if he can live on 40% of his pension, perhaps one more (smug ;-) try is in order. Work the math for him, then kick him to the curb.

AlwaysLearnin

atush wrote: »

6% a year early reduction is brutal! Surely your friend knows that he will permanently reducing his pension by 60% to take it at 55? Can he live on 40% of the amt his pension will be at 65? If he is spending all now, probably not.

If no one has asked him if he can live on 40% of his pension, perhaps one more (smug ;-) try is in order. Work the math for him, then kick him to the curb.

It is brutal, and it's actually less than 40% after he's taken the lump sum - all those years accruals just being wasted (IMHO)! I've pointed this out to him but he just responded by saying that he'll downsize and have extra cash from that too :wall:. His opinion appears to be that he'd rather live life now, while he can, not needing money when he gets 'that old' as he'll have done it all and/or will be too old by then (55?!!). He's not interested in leaving any legacy either, saying "they'll have to learn to make their own way in life - my parents didn't leave me anything".

He's always been an 'of the moment' type guy, and as a result nothing ever seems to worry him. Quite enviable in certain circumstances, but I wouldn't swap, especially not in 15-20 years! :cool:

laurel7172

I'm afraid that numbers and logic have no chance of persuading anybody to reconsider a decision that was made irrationally in the first place.

Believe me, I've tried.