How old will you be when you can retire?

grizzly1911

gadgetmind wrote: »

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.

If they all started doing this now though the returns that are being generated now and for perhaps the next 30 years would fall.

Those expecting to need to rely on their investments over that period would therefore have a lower pot to use.

In addition people don't tend to consume the same high profit wasteful garbage, particularly high value branded items, technology or binge fun when they get older. Certainly not in the volume of the young.

This will further depress investment returns.

CLAPTON

N1AK wrote: »

Sorry can I clarify you mean some proportion of general taxation is 'forced' saving in that it funds the state pension? If so then yes I agree. The biggest issue with that current solution is that no one has any idea what the state pension will look like etc when they get there.

In my opinion the advantage of handling this differently is that it will be a real pension pot that belongs to that person. I can't influence my state pension by saving more (except to probably get less benefits) etc but I could look at what my 'forced' pension pot is going to give me and how increased contributions would alter that.

The state pension based system is flawed. I can comfortably afford to pay into a private pension, but I have so little faith in the system that I'm perpetually considering stopping. The government is having to bribe me with tax relief, my company is paying in more than I am and I pay less tax via salary sacrifice; all that combined is just enough to make me choose a pension over savings that I can take elsewhere.

you are correct in saying you don't know what you will get from that state scheme
which is just as true of any private scheme (except for final salary schemes)

it seems to me that the reasonable arrangement is an larger state pension guaranteed for all and then each to their own without tax incentives

N1AK

grizzly1911 wrote: »

If they all started doing this now though the returns that are being generated now and for perhaps the next 30 years would fall.

Those expecting to need to rely on their investments over that period would therefore have a lower pot to use.

In addition people don't tend to consume the same high profit wasteful garbage, particularly high value branded items, technology or binge fun when they get older. Certainly not in the volume of the young.

This will further depress investment returns.

The money is coming from somewhere. In your example what is currently happening is £x billion pounds are being spent by people on optional purchases that would stop if they paid more into pensions. I agree. However, if those additional pension savings (perhaps 1-2% of total income in the UK) came in then the government would have a smaller future welfare liability. It could then spend more money now on infrastructure, training, education etc.

I wouldn't have been opposed to avoiding anything that encouraged too much additional spending during the recession but we're making decent headway out of that now and a small change in pension savings for some now wouldn't endanger it.

black_taxi_2

what the gov bringing in,you can pay extra into state pension,to boost it?

wotsthat

grizzly1911 wrote: »

If they all started doing this now though the returns that are being generated now and for perhaps the next 30 years would fall.

Those expecting to need to rely on their investments over that period would therefore have a lower pot to use.

In addition people don't tend to consume the same high profit wasteful garbage, particularly high value branded items, technology or binge fun when they get older. Certainly not in the volume of the young.

This will further depress investment returns.

There's a balance to be had. If my investment returns are depressed but I'm spending less to fund other coffin dodgers in retirement then I may well be better off.

I really can't see a downside to people taking a little more responsibility for themselves and spending less on 'wasteful garbage' and tat. Yes, investment returns from purveyors of crap may be less attractive but as we don't live in a static system investors will move capital to seek more attractive returns.

N1AK

CLAPTON wrote: »

you are correct in saying you don't know what you will get from that state scheme
which is just as true of any private scheme (except for final salary schemes)

it seems to me that the reasonable arrangement is an larger state pension guaranteed for all and then each to their own without tax incentives

The difference between a state scheme and a private scheme is that the government, hasn't yet, decided to throw the terms of private pensions out. With a state pension the age you can start claiming from and the amount you'll receive, whether it'll be assessed for savings etc can barely even be guessed at.

With a private pension you'll have variability in interest rate and annuity rate but will know when you can claim it and within a reasonable margin what you're likely to get when you do.

I don't see the benefit of a better state pension over a basic state pension and private provision. I've seen the state fundamentally mismanage the state pension since its inception and I have absolutely no faith in its ability to do better in future. If the state can stop pensioners from being homeless, hungry or freezing then I think it's doing enough.

The current government (and I am sure labour would be no better) know, and take full advantage of, the fact that they can buy current pensioner votes by giving more in pensions now while promising less in future because people who aren't close to retirement incorrectly look at the current pension to decide who to vote on not the pension they will actually receive. Thus the current governments repeated changes to pensions to make them better now but worse in ~20+ years.

CLAPTON

N1AK wrote: »

The difference between a state scheme and a private scheme is that the government, hasn't yet, decided to throw the terms of private pensions out. With a state pension the age you can start claiming from and the amount you'll receive, whether it'll be assessed for savings etc can barely even be guessed at.

With a private pension you'll have variability in interest rate and annuity rate but will know when you can claim it and within a reasonable margin what you're likely to get when you do.

I don't see the benefit of a better state pension over a basic state pension and private provision. I've seen the state fundamentally mismanage the state pension since its inception and I have absolutely no faith in its ability to do better in future. If the state can stop pensioners from being homeless, hungry or freezing then I think it's doing enough.

The current government (and I am sure labour would be no better) know, and take full advantage of, the fact that they can buy current pensioner votes by giving more in pensions now while promising less in future because people who aren't close to retirement incorrectly look at the current pension to decide who to vote on not the pension they will actually receive. Thus the current governments repeated changes to pensions to make them better now but worse in ~20+ years.

looking 20-30 years ahead, it's doubtful that one could predict what a private pension will provide any better than the state system.

I don't really understand what you mean about the state fundamentally mismanaging the state pension: it provides broadly what is claims to provide.

kabayiri

gadgetmind wrote: »

...
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.

Hamish has been telling us all to get into BTLs big time for the last few years.

And...don't let him hear this...but he has been right. So far, property has "done good". You can also flog it off at times of need.

I strongly recommend people look after themselves in some capacity, but I'm not so restrictive.

kabayiri

CLAPTON wrote: »

looking 20-30 years ahead, it's doubtful that one could predict what a private pension will provide any better than the state system.

I don't really understand what you mean about the state fundamentally mismanaging the state pension: it provides broadly what is claims to provide.

Given the last 20 - 30 years I would choose a risk averse strategy, if at all possible.

You never know - a future chancellor could raid private pension funds with a windfall tax. Nah...that would never happen, right?

kabayiri

grizzly1911 wrote: »

If they all started doing this now though the returns that are being generated now and for perhaps the next 30 years would fall.

Those expecting to need to rely on their investments over that period would therefore have a lower pot to use.

In addition people don't tend to consume the same high profit wasteful garbage, particularly high value branded items, technology or binge fun when they get older. Certainly not in the volume of the young.

This will further depress investment returns.

We tend to polarise the discussion with discretionary spend meaning iPhones and lots more partying.

But what about using money to put yourself through a training course / setting up your own business / buying better transport to take better jobs further afield ?

These are all just as valid spend options.