if you are able to save

margaretclare

missile wrote: »

One would also have to take into account several other factors like the rise in cost of living vs a via increase in pension. I have no doubt that the majority view of the "experts" is that pensioners are worse off.

Again, you insist on lumping all pensioners together as though they were a homogeneous group. Even if you qualified it by saying 'some pensioners' or 'many pensioners' I would have to ask: 'which pensioners - which ones exactly?'

In my mind, there is no doubt that recent increases in the state pension do not reflect the rise in price of several essential items such as gas, electricity. water and council tax. Council tax, in particular, is increasingly unaffordable for people on low and fixed incomes, such as pensioners.

You've done it again!

In any case, the discussion was about income and not about expenditure.

Among older people, the poorest of all are women living alone who made no provision for their own retirement because they were encouraged to believe that it was a 'man's job' to provide for all their needs including retirement. A vestige of this thinking can still be found in the term 'pensioner couples'. Actually pensioners do not receive income as a couple. They receive it as individuals, and they each have a tax allowance, currently £7550. This has been the case since the Budget of 1990 (the one piece of political lobbying that I did over some 20 years that was successful - eventually).

In addition, the link for myfinance that you posted also says this: "The cost of living for retired people may be rising but so too has their wealth."

Margaret

missile

If you disagree with Ian Taylor MP, I suggest you take it up with him. An increase in the value of their home does not help many pensioners find the cash to pay the increase in their council tax.

In any case the discussion was about saving.

EdInvestor

It could be that the popular understanding of "pensioner economics" is out of date.

Although there is undoubtedly a group of pensioners who are very poor and living on pension credit (119 quid a week plus free council tax and housing benefit), many of these are (very) elderly widows who paid the "small stamp" and whose husband's pensions either provided no spouse annuity or predated the introduction of SERPS in 1978. It is not uncommon among more elderly retirees to see very poor people with incomes under 10k before benefits.

But the average household income of the younger generation of retirees is now much higher - latest reports suggest it is just under 23k a year.

Survey

That would reflect either two similar incomes - as with margaret and DH - where both people have worked for long periods and have company/provate pensions as well as SERPS, or a combination of one larger and one smaller pensions (eg 15k/8k) where the man has worked throughout but the wife has had her career interrupted by childcare duties.

Obviously a considerable chunk of pensioners are much better off than this.Indeed, one writer thought they might be the cause of an economic puzzle over why the interest rate rises we have had recently don't seem to be "working" in terms of reducing inflation by cutting consumption and dampening the rise in house prices.

Could grey spending power be the missing factor?

After all, for the greys, interest rate rises produce additional income and may be an encouragement to spend.

EdInvestor

missile wrote: »

If you disagree with Ian Taylor MP, I suggest you take it up with him. An increase in the value of their home does not help many pensioners find the cash to pay the increase in their council tax.

Equity release is increasingly being seen as a way around this problem, and also to pay off debt and endowment mortgage shortfalls. The new pension rules are also helpful as they will deliver more lump sums to people for "emergency funds" - 25% tax free cash can now be taken out of contracted out protected rights pensions, and pensions worth under 16k in total can be taken in cash.

missile

Interesting points you raised Ed. I would suggest the pensioners least well off are those just above the limit, or too proud to claim benefit to which they are entitled.

Although in the right circumstances equity release is a solution, I am not sure that it is right for everyone or even the majority, particularly when

One in five pensioners - more than a million people - owes an average of £38,000 on their mortgage.

Perhaps a better solution is where family members help each other, as do (for example) people of eastern culture.

margaretclare

missile wrote: »

In any case the discussion was about saving.

Yes, it was. You wrote:

One would also have to take into account several other factors like the rise in cost of living vs a via increase in pension.

I would also have to ask: what rise in the cost of living?

Once retired, most of us no longer have a mortgage to pay. The poorer pensioners i.e. those living only on basic state pension plus pension credit, usually get their housing costs met via housing benefit and some or all of their council tax paid. Food costs have been quoted as a proportion. OIder people need 'quality rather than quantity' i.e. they need fewer calories but they need the essential nutrients, but they usually have more time to shop around for better quality. I can't see how food costs are 'more'. These basic essentials probably appear as a higher proportion of total expenditure because of the absence of other expenses like mortgage, children's costs, those kind of things.

You were the one who brought expenditure into the discussion - I agree it was about saving.

Ed, you're right, the whole discussion about pensioners' income is out of date and needs to be re-thought. The worst mistake is that of lumping all pensioners together as if they're all exactly the same - they're not. Approximately 1 in 4 women (according to AgeConcern) are living below the poverty line - these are mainly older widows with no pension provision of their own right. Another AgeConcern report was called 'Just Above the Breadline' - this focused on the people who are just a little bit too well-off to claim pension credit and these are the ones who're struggling, money all gone by Sunday night and you see them queuing at the post office first thing Monday morning. Another group includes people like DH and I. And I know quite a number of retired people who are a lot better off than we are - friends of ours who recently bought a new motor caravan cash down just so they can see more of the beautiful islands we live in. There are also the people who we see posting here, whose assets total over the IHT level and they're worried about that.

As I said, I think we're in the best position - not rich not poor. We live modestly but comfortably, we have all we need and we're not worried about a thing. As regards income and savings, our combined income from all sources is something like £25K a year. Of that, we save regularly, between £6 and £7K a year. And we're not 'scrimping and scraping' either. As I've said before, we save because we don't know what the future holds, what we may need. In answer to the question 'Why not spend it?' well, we do that as well, only we're not about to spend just to get rid of it, in the mistaken belief that 'somebody' will take care of us in years to come.

Margaret

margaretclare

missile wrote: »

In any case the discussion was about saving.

Yes, it was. You wrote:

One would also have to take into account several other factors like the rise in cost of living vs a via increase in pension.

I would also have to ask: what rise in the cost of living?

Once retired, most of us no longer have a mortgage to pay. The poorer pensioners i.e. those living only on basic state pension plus pension credit, usually get their housing costs met via housing benefit and some or all of their council tax paid. Food costs have been quoted as a proportion. OIder people need 'quality rather than quantity' i.e. they need fewer calories but they need the essential nutrients, but they usually have more time to shop around for better quality. I can't see how food costs are 'more'. These basic essentials probably appear as a higher proportion of total expenditure because of the absence of other expenses like mortgage, children's costs, those kind of things.

You were the one who brought expenditure into the discussion - I agree it was about saving.

Ed, you're right, the whole discussion about pensioners' income is out of date and needs to be re-thought. The worst mistake is that of lumping all pensioners together as if they're all exactly the same - they're not. Approximately 1 in 4 women (according to AgeConcern) are living below the poverty line - these are mainly older widows with no pension provision of their own right. Another AgeConcern report was called 'Just Above the Breadline' - this focused on the people who are just a little bit too well-off to claim pension credit and these are the ones who're struggling, money all gone by Sunday night and you see them queuing at the post office first thing Monday morning. Another group includes people like DH and I. And I know quite a number of retired people who are a lot better off than we are - friends of ours who recently bought a new motor caravan cash down just so they can see more of the beautiful islands we live in. There are also the people who we see posting here, whose assets total over the IHT level and they're worried about that.

As I said, I think we're in the best position - not rich not poor. We live modestly but comfortably, we have all we need and we're not worried about a thing. As regards income and savings, our combined income from all sources is something like £25K a year. Of that, we save regularly, between £6 and £7K a year. And we're not 'scrimping and scraping' either. As I've said before, we save because we don't know what the future holds, what we may need. In answer to the question 'Why not spend it?' well, we do that as well, only we're not about to spend just to get rid of it, in the mistaken belief that 'somebody' will take care of us in years to come.

Margaret

missile

I would also have to ask: what rise in the cost of living?

http://www.statistics.gov.uk/CCI/nugget.asp?ID=19
In many areas the council tax has increased more than inflation eg the Greater London Authority increased 5.3%

You were the one who brought expenditure into the discussion

It is hard to find money to save (far less invest) for those whose income barely covers their expenditure.

margaretclare

missile wrote: »

It is hard to find money to save (far less invest) for those whose income barely covers their expenditure.

Yes, but as I keep saying, this is not all pensioners, it is some pensioners. The title of this thread is 'If you are able to save'. This doesn't assume that everyone in retirement is able to save, but equally, you shouldn't assume that every pensioner is in the situation of having income that barely covers expenditure.

This might be of interest, today: http://news.bbc.co.uk/1/hi/business/6945557.stm

This appears to suggest that the cost of living is falling!

Margaret

missile

At no time have I held or expressed the predjudices which you appear to be assigning to me.

Your link does not suggest that the cost of living is falling, but rather the rate of increase in some of the indices has fallen. The article then goes on to predict rises later in the year.