How old will you be when you can retire?

kabayiri

I remember Ros Altman on one of these tv newsette type programs discussing pension provision with a bunch of guys, I think they were all gas fitters or similar.

She asked what a reasonable retirement income would be. The group settled on £15K.

She explains to person A (28) that he should be saving £250 a month in pension commitments.

Then to personB (40) she explains that his later start means a higher figure of £400 a month was needed.

Both guys laughed, muttered into their beer about not having that kind of disposable available, and the conversation moved on.

The challenge it seems to me, is how you effectively engage with this group? Telling them they should have started at 21 might be technically correct, but you are hardly going to win their attention are you?

So what can realistically be done? Perhaps we need to reset expectations; create more flexible pension products; encourage more part time retirement.

I'd much prefer an inclusive society. I don't think impoverished pensioners makes good economic sense if they end up in hospital beds.

gadgetmind

kabayiri wrote: »

The challenge it seems to me, is how you effectively engage with this group?

Explain the maths, tell them about the trade offs, and then it's over to them as they're grown adults. If their outcomes stink, that's their fault as we've done our bit by flagging the issue well in advance.

grizzly1911

gadgetmind wrote: »

Explain the maths, tell them about the trade offs, and then it's over to them as they're grown adults. If their outcomes stink, that's their fault as we've done our bit by flagging the issue well in advance.

If this group don't consume but merely save or contribute to pensions then the returns won't be made on investments we hold today or in the near future sufficient to pay the pensions we planned for.

Loughton_Monkey

kabayiri wrote: »

.....The challenge it seems to me, is how you effectively engage with this group? Telling them they should have started at 21 might be technically correct, but you are hardly going to win their attention are you?

So what can realistically be done? Perhaps we need to reset expectations; create more flexible pension products; encourage more part time retirement....

Just imagine what would have happened had State Pension never been invented.

However it was invented, and was 'perceived' to be a valid system under which you compulsarily paid National Insurance, and that payment guaranteed you a pension for life.

In a sense, it 'worked'. In another sense it didn't, for the simple reason that it was never funded and 100+ years later we are seeing the consequences of that.

To add on, therefore, a supplementary arrangement that is funded is, in my view very sensible. But to make it voluntary - which sadly it is at the end of the day - was (to me) an act of paramount madness on the Government's part.

I just wondee if it will take another 100 years before anyone does something about it.

grizzly1911

Loughton_Monkey wrote: »

However it was invented, and was 'perceived' to be a valid system under which you compulsarily paid National Insurance, and that payment guaranteed you a pension for life.

In a sense, it 'worked'. In another sense it didn't, for the simple reason that it was never funded and 100+ years later we are seeing the consequences of that.



I just wondee if it will take another 100 years before anyone does something about it.

Who knows if it had been funded by all - full employment and by a more even distribution of wealth it may have worked. In fact there is an upper earnings limit in place for the full contribution. Did all women need to pay a full stamp in the past or did they derive benefit from their spouse.

As we have had neither and are drifting in the opposite direction are fewer low paid, zero hour/part time workers actually making any contribution.

wotsthat

grizzly1911 wrote: »

If this group don't consume but merely save or contribute to pensions then the returns won't be made on investments we hold today or in the near future sufficient to pay the pensions we planned for.

We don't need to worry about this outcome because it will never happen.

The best solution is one which makes clear the risks and then leaves people to it. Minimum involvement by the state other than to ensure, where possible, people are forced to save for a subsistence pension.

Some people will be very disappointed in retirement but if they didn't bother saving then that's hard cheddar. They're not going to starve and will be less of a burden on my retirement savings.

gadgetmind

grizzly1911 wrote: »

If this group don't consume but merely save or contribute to pensions

They will still consume but spread it over their lives rather than blowing everything when younger and having nothing when older and thus being reliant on the state.

gadgetmind

wotsthat wrote: »

The best solution is one which makes clear the risks and then leaves people to it.

Absolutely.

And it's not as if it's exactly hard to obtain the information required to make an informed decision. Those who choose to remain ignorant have made a decision to remain uninformed while surrounded by a sea of knowledge.

CLAPTON

anyone 20 years ago that had the risks explained
-of the financial collapse in 2007,
-stock market meltdown,
-quantitative easing,
-all time low in annuity rates,
-constant state meddling, -
-constant rule

probably wouldn't have started a private pension and maybe sensibly so.

gadgetmind

CLAPTON wrote: »

probably wouldn't have started a private pension and maybe sensibly so.

I agree regards the meddling, but all of the rest is perfectly normal volatility that usually works in your favour. As for annuity rates, 1) you don't need to use an annuity, 2) anyone taking out an annuity over recent years would probably have done well out of bonds so it's swings and roundabouts.

I expect the next 20 years to be more of the same (but different) yet I will continue to fund my pensions and I *strongly* recommend that others do the same.