Raising the pension age in order to pay for pensions

chucknorris

IveSeenTheLight wrote: »

My thoughts on it are that I will want to spend more in the early years of retirement than I will in later years.

As an example, if I retire at 67 as per my current government defined retirement age, I may wish to have say 8 years of higher expenditure, enjoying retirement, going on multiple holidays etc.
Then when I'm 75 - 80, I start to curtail the high life.
When I'm 80+, I'm probably happier to settle down at home with the pipe and slippers.

So my expenditure needs will be higher in the earlier years than in the later years.

I reiterate my point that having paid into a pension for 50+ years, I'd like to have the choice what to do with my fund.
I may find myself in poor health, maybe with terminal cancer and only a few years expected left, which I may then want to spend that life savings frivolously as opposed to having £260k sitting in a fund to give me a £20k per year to spend.

Exactly! If you spend more in the early years of retirement it leaves you less for the later years, what if I lived to 100 instead of late 80's/early 90's but I don't have a decent pension and have spent most of my capital (in reality I probably won't dip into the last £0.5m, but you never know). You can draw it all down apart from the last 20k,I have 3 things to say about that:

1. Fair enough if that pension fund (for a 20k income) might be most of their wealth to someone, but if it isn't you are free to draw the rest down.

2. Even if you consider the fund significant it might be secondary to the size of the rest of your wealth and therefore can be regarded as a secondary secure but safe investment.

3. It is very likely that I will not been paying into pensions for more than 10 years before my retirement (I will have to wait a few years to draw, but I don't need it anyway, it is surplus). I'm not saying that they are great for everyone, I am saying that they suit me.

By the way I have no intention of giving up having an active life when I reach 80, fair enough my health and fitness may dictate that, but I'm not giving up without a fight. A few years ago an 83 year old finished in front of me in the Dorking 10 mile road race and he has given me inspiration that an active life can continue well into your 80's (and possibly beyond).

MFW_ASAP

IveSeenTheLight wrote: »

The more I look at pensions, my conclusion is that they are a scheme to try and ensure an income into retirement, but moreso is just a way for pension administrators to make money.

Anyone with a little bit of sense would be able to get a better return on that investment

If you think so, then get a SIPP. You can invest in individual shares or government and corporate bonds and not use a fund manager, but you still get the tax rebate of either 20% or 40%.

You're not forced to use investment funds and you're not forced to buy an annuity. The prejudice people* have against pensions seem to be rooted in the past, perhaps because they ruled them out long ago and so haven't kept up with the changes as they have evolved.

*speaking generally here, not aiming at yourself.

chucknorris

MFW_ASAP wrote: »

The prejudice people* have against pensions seem to be rooted in the past, perhaps because they ruled them out long ago and so haven't kept up with the changes as they have evolved.

*speaking generally here, not aiming at yourself.

This describes me perfectly until 2 years ago when I suddenly realized that I was in a completely different financial position to when I first built up that prejudice, but I had kept my mind closed to pensions despite both my circumstances and also the pensions changing.

IveSeenTheLight

chucknorris wrote: »

This describes me perfectly until 2 years ago when I suddenly realized that I was in a completely different financial position to when I first built up that prejudice, but I had kept my mind closed to pensions despite both my circumstances and also the pensions changing.

Probably describes me as well.
I've been paying 15% of my salary into a pension for all of my working life (24 years) and with 27 years to go, I'm expecting the fund to be substantial enough to survive on, but I have not kept up to speed with pensionable developments.

Essentially I just accepted that saving 40% on tax meant that whilst pensions have it's flaws, I'm probably still better off with it.

I need to arrange a sit down with my financial adviser to go through the options.

Loughton_Monkey

IveSeenTheLight wrote: »

My thoughts on it are that I will want to spend more in the early years of retirement than I will in later years.

As an example, if I retire at 67 as per my current government defined retirement age, I may wish to have say 8 years of higher expenditure, enjoying retirement, going on multiple holidays etc.
Then when I'm 75 - 80, I start to curtail the high life.
When I'm 80+, I'm probably happier to settle down at home with the pipe and slippers.

So my expenditure needs will be higher in the earlier years than in the later years.

I reiterate my point that having paid into a pension for 50+ years, I'd like to have the choice what to do with my fund.
I may find myself in poor health, maybe with terminal cancer and only a few years expected left, which I may then want to spend that life savings frivolously as opposed to having £260k sitting in a fund to give me a £20k per year to spend.

As a retiree of about 8 years standing, I still intend to maintain multiple holidays, a luxury car, and a bit of Champagne for Mrs LM.

I continue to thunder that [for me anyway] I would consider myself a failure if (a) All my non-house assets were in pensions, or (b) None of my non-house assets were in pensions.

All other things equal, my pensions performed better due to tax relief. It is OK to suggest that you would prefer your last (say) £260K was in cash rather than a £20K so you could spend it 'frivolously'. But would you? Seriously? To rely on a strategy that stores cash rather than income "in case" you develop your terminal illness just at the right time doesn't make sense.

With a terminal illness, I would suggest the only 'cash splashing' exercise you would want to do is get yourself into an A1 hospice or home, at any cost. Since by definition you don't need the house, then that 'will do nicely' to fund for this.

I just cannot envisage sitting with my one cigar and one small G&T a day [because that's all I could afford] between age 80 and 95, living on State Pension only, and looking at my old photographs of that 3 months in Bali, the brand new XJ, and that weekend in the Royal Suite at Claridges.

I'd rather look at just one of them, and then look at my £20K coming in regularly for as long as I live.

This is why I want half and half. No huge negative to that. It gives you a "Plan B".

coastline

If current trends continue not only will the government have a problem paying the Basic State Pension but they will need to finance the additional housing benefit problem..
The number of buy to let mortgages stands at 1.5m...this figure was under 90,000 around a decade ago out of a total of 11m mortgages in the UK....the rest of the housing stock around 50% in total is mortgage free.
If people continue to rent due to many factors and the private rental market expands further then the government will have to finance these rents.
The state pension is to be set around £145 a week shortly after the latest review...if people don't have additional funds then the government will need to help.
Trying to juggle day to day living with saving for mortgages and private pension plans isnt going to be easy without secure employment.

http://www.cml.org.uk/cml/media/press/3606

http://3.bp.blogspot.com/_-VeC39yh6nc/Rx9xVYRESDI/AAAAAAAAAF0/zY6V_RRoj18/s1600-h/buytolet.jpg

IveSeenTheLight

Loughton_Monkey wrote: »

It is OK to suggest that you would prefer your last (say) £260K was in cash rather than a £20K so you could spend it 'frivolously'. But would you? Seriously? To rely on a strategy that stores cash rather than income "in case" you develop your terminal illness just at the right time doesn't make sense.

I would like the choice, not enforced upon me after 50 years of investment.

Loughton_Monkey wrote: »

With a terminal illness, I would suggest the only 'cash splashing' exercise you would want to do is get yourself into an A1 hospice or home, at any cost. Since by definition you don't need the house, then that 'will do nicely' to fund for this.

What if the house is needed by my family?
What if I don't want to go into care? I know people with terminal issues that are cared for from home?
What if the money could be used to prolong my life with drugs / equipment which is not available on the NHS (I realise this could open up a critical heath insurance cover which I do have)

Like I said, I'm not dismissing the option of taking an annuity, but to be forced to after half a century of investing it is not right in my opinion.

Loughton_Monkey

IveSeenTheLight wrote: »

I.....What if the house is needed by my family?
What if I don't want to go into care? I know people with terminal issues that are cared for from home?
What if the money could be used to prolong my life with drugs / equipment which is not available on the NHS (I realise this could open up a critical heath insurance cover which I do have)...

Lifetime mortgage hits the spot perfectly.

chucknorris

Loughton_Monkey wrote: »

As a retiree of about 8 years standing, I still intend to maintain multiple holidays, a luxury car, and a bit of Champagne for Mrs LM.

I note that the gin and tonics seem to considered a necessity as they aren't listed as one of the luxury items requiring intended to be maintained. I am of course assuming that you are not intending to give them up before hell freezes over.

Thrugelmir

coastline wrote: »

If people continue to rent due to many factors and the private rental market expands further then the government will have to finance these rents.

Government doesn't fund. The taxpayer does. Rents could always fall..........

There's no magic money tree that many people seem to think exists.