How old will you be when you can retire?

CLAPTON

N1AK wrote: »

Strange I don't remember the OBR saying this anywhere...



The OBR hasn't blamed anything on anyone. They have projected government policy and spending over 50 years and it isn't viable. They have shown areas in which government spending has increased GDP.

So you're creating strawmen, attempting to deny it, and refusing to admit that we don't have a viable budget as you previously claimed. Why your arguments aren't being seen as persuasive at this point is truly a mystery.

So again: Do you believe our current government 'plan' of 1.8% deficit and 100% GDP debts is viable?

If you don't then I'd be interested in hearing how you would balance this. If you do, then I'm not much interested in anything you've got to say on the economy

I was explicitly commenting on the situation about state pensions.

It's no coincidence that over that period state pensions will go from 5.8% to 8.4% of GDP (+2.6% or +45%), with increases in healthcare and long term social care as well.

and not the general viability of 100% of GDP government debt

It is completely reasonable that the percentage consumed of GDP is broadly related to the number of people in that category; so I see nothing surprising that the %age of GDP consumed by state pension would rise with the rising (%age ) of pensioners.

surely you agree with that?


I like the OBR I'm not blaming anything on anyone and I'm not saying is fair or just. I'm saying it's what can be expected.

DevilsAdvocate1

When I started work the retirement age for a woman was 60. I am now 44 and believe it is now 67. I guess I'll never get the chance to retire as I'm sure that it will increase many more times between now and then.

gadgetmind

DevilsAdvocate1 wrote: »

When I started work the retirement age for a woman was 60. I am now 44 and believe it is now 67. I guess I'll never get the chance to retire

No, what's changed is the state pension age. You can retire whenever you like as long as you're prepared to make your own provision.

Tahlullah

I hope to be 55/60 years old when I go into semi retirement. Yes, I was one of those whom people would class as living in lala land. When I was younger and got my first well paid job, I joined the Local Authority's pension - ver nice too. Did I undertand it? No. Did anyone explain it to me? No. But, I also took out an AVC. I have no idea why, I just did.

5 years later, I left the Council for another well paid job, (relative to income at the time) and decided to buy a more expensive house. So, I stopped paying into the pensions as the new organisation didn't offer one and no-one had explained the advantages; plus more importantly, I needed the money to pay the mortgage.

Many years of work without debt and instead of paying into a pension, I bought 2 properties. My main home and my flat, where I have to live to work.

My plan is to retire once I have finished paying the mortgage on the house (the flat is owned outright), to enjoy it and spend what money I now have making the most of life. I will then sell the house and live in the flat.

So, am I an ignoramus because I didn't take advantage of all that information available to me? Yes, possibly. But even if I was made aware of the possibilities, would I have put my money into a pension? No, probably not, because my lifestyle is such that I prefer to have the house I have, in a beautiful part of the country, that I can enjoy whilst I have good health.

The problem with pension planning is believing that you will live long enough to reap the fruits of your labour. I have never believed that I will live longer than the national average, which means I want to enjoy my money whilst I can, rather than retiring at 67 and dying within 3 years, having lived frugally and saved my money. For what?

Yes, I still have a pension that I pay into now, but this is not where I believe my income will come from. The majority of the capital will come from the sale of my home. I won't have to spend out of that capital to finance the purchase of another home. And if I don't have enough to live on, I am certain the state will help. After all, I have paid enough NI contributions to get a full state pension.

People do make choices. Sometimes, you may not understand the logic, but nevertheless, it is there. It can come down to need or desire at the time.

wymondham

Ivrytwr3 wrote: »

Not all Public Sector pensions are enough to retire on. After 22yrs service i i could leave at aged 40 with a £35k lump sum and £12k immediate pension.

£12k per year at 40 year old is not a retirement sum.

£12k is not that bad if your outgoings are under control.


It's not what you get, its what you spend that makes the difference!!

chucknorris

gadgetmind wrote: »

No, what's changed is the state pension age. You can retire whenever you like as long as you're prepared to make your own provision.

it's amazing how many misunderstand this concept. Although I must admit that at the moment a significant part of the reason that I am still working is the exceptional value of the TPS (teachers' pension scheme), an increasingly less important part is that I actually enjoy my job. But after the death of my dog highlighting that an awful death potentially awaits many of us, if you are financially independent then maximum enjoyment of your last few decades should be the priority over everything else.

dtsazza

Tancred wrote: »

Looking at the questionnaire I can see that there are some incredibly rich (or simply stupidly optimistic) people here. 10.9% of those who answered as of today said they will retire between 50 and 55 - that's even before the minimum retirement age - WOW! And only 7.05% will retire after age 70. This really shows how unbelievably unrealistic people are when considering their retirement planning.

Some might well be unrealistic. But then I expect the people who read MSE are more likely to fall into the other camp: people who do appreciate what retirement entails, and so have taken appropriate steps to plan for it.

I base my own assessment on something much like this: The Shockingly Simple Math Behind Early Retirement. There's a table halfway down that summarises - if you save 35% of your income you'll be financially independent in 25 years. If someone starts doing this at 25, then they'll likely be in a position to retire at 50. And if they're on a decent salary and make the decision to do it, then saving 35% is really not that hard.

Btw - 55 is not "the minimum retirement age". It's the earliest age at which you can access funds stored in a pension. People who have done the calculations, and think they might be in a position to retire before 55, are not going to have 100% of their funds in a pension for exactly that reason.

Loughton_Monkey

dtsazza wrote: »

Some might well be unrealistic. But then I expect the people who read MSE are more likely to fall into the other camp: people who do appreciate what retirement entails, and so have taken appropriate steps to plan for it.

I base my own assessment on something much like this: The Shockingly Simple Math Behind Early Retirement. There's a table halfway down that summarises - if you save 35% of your income you'll be financially independent in 25 years. If someone starts doing this at 25, then they'll likely be in a position to retire at 50. And if they're on a decent salary and make the decision to do it, then saving 35% is really not that hard.

Btw - 55 is not "the minimum retirement age". It's the earliest age at which you can access funds stored in a pension. People who have done the calculations, and think they might be in a position to retire before 55, are not going to have 100% of their funds in a pension for exactly that reason.

Your link is definitely upon the right lines. My own metrics were working for 34 years, and saving a total of 26.4% of my total pre-tax income. I retired at [just] 56 with assets of roughly 40 times my annual spending.

I would add the following observations....

1. Retirement before age 55 might well be 'difficult', but I think the pension rules don't really matter. It's the retirement assets amount that matters. Providing it isn't all in pension [which I strongly suggest it shouldn't] then it is a 'mere' issue of controlling the cash flow. This is easily done (usually).......

2. A minor point, though, is that since you can't even draw down a small pension, then the years of retirement prior to age 55 may well give you a period in which you are not using your annual tax relief.

3. The other main point is that for most people, their income increases during working life. Sometimes quite substantially. Graphs and equations typically never allow for this. The bottom line (mathmatically) is that you need to save a larger %age if your income escalates (in real terms) than if it were level. In my own case, my income escalated quite a bit. My % savings was probably in the order of about 25% in the early third, much less in the middle third, and increasing up to 40%/50% in the 'final' third.

Anyone who has retired would normally agree that your objective (or at least it should be) is to define and achieve a certain level of spending in retirement. Spending is almost always a mixture of income and capital. Rather perversely, a lot of people make calculations more difficult by concentrating on income. Whilst I agree that income, less spending, is indeed what you 'save' [invest], I find it far, far, simpler to do calculations by how much you spend rather than how much you save. It really becomes far more meaningful. Far simpler. And really brings the financial facts of life home to you.

MFW_ASAP

Ivrytwr3 wrote: »

Not all Public Sector pensions are enough to retire on. After 22yrs service i i could leave at aged 40 with a £35k lump sum and £12k immediate pension.

£12k per year at 40 year old is not a retirement sum.

Do you expect to retire at age 40 and receive a larger pension? If you live to 80, you'd have been retired 40 years, and will have only worked for 22 years. Totally unsustainable.

I'm 45 and my current pension pot stands to earn me about £10250 a year. I won't be retiring on that though because I have a further 20 years to go, years where I'll increase my pension (and other) savings as my children leave and as we pay off the mortgage.

I'd love to know how much you've earned and how much you've put away for that £12k. I've been putting money into pensions all my life and I have been a high rate taxpayer for about 15 years and I have a paltry £10k so far. Contrast this with someone in a public sector scheme, who pay a small amount in and have the public guarantee their retirement. Also totally unsustainable.

CLAPTON

MFW_ASAP wrote: »

Contrast this with someone in a public sector scheme, who pay a small amount in and have the public guarantee their retirement. Also totally unsustainable.

The OBR estimate is that the cost of index linked gold plated public sector pensions will be just over 1% of GDP.
Whilst they may be totally unfair and far too generous it doesn't seem reasonable to say they are 'unsustainable'.