What Benefits at 60?

seven-day-weekend

sharnad wrote: »

Most people will have no choice but to continue working until 68 now. They just won't be able to afford to retire and will have to carry on.

Most people will pay into private pensions now, which were not open to many workers, especially if you were female or part-time, at one time.

So people will be able to draw these pensions, and could work part-time instead of full-time, from 65 to 68.

dunstonh

sharnad wrote: »

Most people will have no choice but to continue working until 68 now. They just won't be able to afford to retire and will have to carry on.

Most people have the choice. A minority will not.

sharnad

seven-day-weekend wrote: »

Most people will pay into private pensions now, which were not open to many workers, especially if you were female or part-time, at one time.

So people will be able to draw these pensions, and could work part-time instead of full-time, from 65 to 68.

So paying into a private pension for five years will give you enough money not to work or go part time for six years until you get state pension. Lots of employers don't let there staff go part time

seven-day-weekend

sharnad wrote: »

So paying into a private pension for five years will give you enough money not to work or go part time for six years until you get state pension. Lots of employers don't let there staff go part time

Why would you only pay into it for five years?

And you don't have to carry on in the same job. We have been retired for nearly ten years, but supplement our income from house-sitting (self-employed). You could also work in retail (B&Q/Asda actively recruit older people) or do temping work, or cleaning (self-employed). There are options!

Bogof_Babe

Don't people save up during their working lives nowadays? I always had a standing order into a savings account, from the age of 17 until I took early retirement at nearly 51, knowing I had a nice financial cushion to help tide me over until my pensions were due.

We went 18 years without a holiday (due to having cats that we didn't want to board, but the financial result was the same), very rarely (special occasions only) ate out or had takeaways, as it seemed so extravagant when the money would be better off saved, and always lived as carefully as possible as regards money. We weren't frugal to the point of misery, but our savings were our first priority on pay days.

I know I'm digressing off topic, but people who want to retire early do need to plan well in advance how they will manage.

sharnad

seven-day-weekend wrote: »

Why would you only pay into it for five years?

And you don't have to carry on in the same job. We have been retired for nearly ten years, but supplement our income from house-sitting (self-employed). You could also work in retail (B&Q/Asda actively recruit older people) or do temping work, or cleaning (self-employed). There are options!

If you were older now you may only gave five years to pay into it. People who have been screwed over having to work several years extra may not have been saving into a personal pension before the change. So older people have to try and find alternate jobs in a job market where there are few jobs.

jamesd

The flat rate pension plan is to pay out about £7,500 a year. So for someone relying on only that income, that's how much they need to accumulate for each year of early retirement before state pension age. I hope that most people are going to have a good deal more than that as an income level in retirement.

You can estimate the cost of pension income using a regular savings calculator. Try these values:

Monthly payment: £50 (increasing with inflation)
Duration: 20 years
Interest rate: 5%
Final value £20,551

So, start 20 years in advance, pay £50 a month into a FTSE All Share Index tracker fund, increasing that with inflation each year, get a hair under the long term investment return of that index and that's enough to retire a bit under three years before state pension age.

Now change the amount to £25 and duration to 30 years. Final value: £20,806. Same sort of result but starting earlier means it only costs £25 a month increasing with inflation.

Now change the amount to £15 a month and duration to 40 years. Final value: £22,890. Even cheaper for someone who starts to do something about it in their late 20s.

Say you're not happy with £7,500 a year. A rough rule of thumb is that every £1,000 of retirement income for life will cost about £20,000 of pension pot. Using the 20 years/£50 tells you that it costs about £40 a month after tax for every extra £1,000 you want of retirement income. Or 80% of the other amounts if you start sooner.

It takes some thought but for a lot of people who are working these aren't outrageously high costs, particularly not if they start early.

All the figures are rough and investments need monitoring, but those should give you some idea of what it takes.

oldtrout

jamesd wrote: »

The flat rate pension plan is to pay out about £7,500 a year. So for someone relying on only that income, that's how much they need to accumulate for each year of early retirement before state pension age. I hope that most people are going to have a good deal more than that as an income level in retirement.

You can estimate the cost of pension income using a regular savings calculator. Try these values:

Monthly payment: £50 (increasing with inflation)
Duration: 20 years
Interest rate: 5%
Final value £20,551

So, start 20 years in advance, pay £50 a month into a FTSE All Share Index tracker fund, increasing that with inflation each year, get a hair under the long term investment return of that index and that's enough to retire a bit under three years before state pension age.

Now change the amount to £25 and duration to 30 years. Final value: £20,806. Same sort of result but starting earlier means it only costs £25 a month increasing with inflation.

Now change the amount to £15 a month and duration to 40 years. Final value: £22,890. Even cheaper for someone who starts to do something about it in their late 20s.

Say you're not happy with £7,500 a year. A rough rule of thumb is that every £1,000 of retirement income for life will cost about £20,000 of pension pot. Using the 20 years/£50 tells you that it costs about £40 a month after tax for every extra £1,000 you want of retirement income. Or 80% of the other amounts if you start sooner.

It takes some thought but for a lot of people who are working these aren't outrageously high costs, particularly not if they start early.

All the figures are rough and investments need monitoring, but those should give you some idea of what it takes.

What? No wonder I'm confused

Fellwalker

shezza2 wrote: »

Good for you making a choice early on. But like I say don't expect hard working miners or anyone else that do hard manual work, to retrain for a pen pushing job or florist after all their life down the pit. Which is quite different from someone who has pushed a pen or tapped on a keyboard all their life and probably retire at 55.

Why on earth shouldn't they retrain? What is it about mining that makes them so special? And we've not had deep mines for so long now that I can't imagine there is anyone now living who has spent "all their life down the pit".

seven-day-weekend

Fellwalker wrote: »

Why on earth shouldn't they retrain? What is it about mining that makes them so special? And we've not had deep mines for so long now that I can't imagine there is anyone now living who has spent "all their life down the pit".

I personally would have thought many people would be glad of an opportunity to retrain for a physically less demanding job. I don't understand why the poster thinks they should not.