Some food for Ruggedtoast's soul

Generali

There's an interesting piece in the FT this weekend about Millennial finances

http://www.ft.com/intl/cms/s/2/94e97eee-ce9a-11e5-831d-09f7778e7377.html#axzz3zzooFxaN

Save money into my pension? I’d rather blow it on a holiday. This is the typical response of a millennial — marketing shorthand for a 20-something — when you ask them about financial planning.


For the generation that grew up in the Noughties, the quest to obtain the comfortable retirement that their parents might still dream of is a fairytale. Graduate debt, poorer pension provision and a runaway housing market are making their financial present a struggle, let alone their financial future.

I'm not entirely without sympathy but I do wonder if the apparent nihilism is actually more an unwillingness to take responsibility.

zagubov

I remember attending a national conference on higher education back in the 90s and the gist of it was that the UK was going to move towards the US model where-

More students studied degrees (and therefore more unis were needed) -up to 40%+ of the school-leaving cohort.

Funding would be student-based as the proportion attending university would be around three times what it was previously and the taxpayer couldn't or wouldn't support the expansion.

Education would be seen as a (American-style)"good" rather than a (European-style) "right".

Working your way through college to get a degree would be a common funding path.

I remember thinking - this is deep stuff and it'll change the educational landscape. Twenty years later, I reckon it has.

Can't shake off the feeling we've followed a failed or at least dodgy model.

Payoff for the economy- big chunk of the population diverted off the dole onto an educational "national service". Employers gain a bunch of compliant workers who expect to pay for learning their skills, so more profits available for shareholders.

Workforce becomes more casualised, and employers and employees feel less committed to each other. Employers don't invest in their workers education, and huge portions of the population are involved in an educational red queen's race where foundation degrees, bachelor's degrees, masters degrees are needed to get jobs that would have accepted a keen school leaver decades ago.

CLAPTON

zagubov wrote: »

I remember attending a national conference on higher education back in the 90s and the gist of it was that the UK was going to move towards the US model where-

More students studied degrees (and therefore more unis were needed) -up to 40%+ of the school-leaving cohort.

Funding would be student-based as the proportion attending university would be around three times what it was previously and the taxpayer couldn't or wouldn't support the expansion.

Education would be seen as a (American-style)"good" rather than a (European-style) "right".

Working your way through college to get a degree would be a common funding path.

I remember thinking - this is deep stuff and it'll change the educational landscape. Twenty years later, I reckon it has.

Can't shake off the feeling we've followed a failed or at least dodgy model.

Payoff for the economy- big chunk of the population diverted off the dole onto an educational "national service". Employers gain a bunch of compliant workers who expect to pay for learning their skills, so more profits available for shareholders.

Workforce becomes more casualised, and employers and employees feel less committed to each other. Employers don't invest in their workers education, and huge portions of the population are involved in an educational red queen's race where foundation degrees, bachelor's degrees, masters degrees are needed to get jobs that would have accepted a keen school leaver decades ago.

why is it a big pay off for the economy for workers to be diverted from the dole to education.
surely we have a massive shortage of workers due to the demographics time bomb which is why we need to import millions of immigrants and so must stay in the EU

Jon_B_2

Generali wrote: »

There's an interesting piece in the FT this weekend about Millennial finances

http://www.ft.com/intl/cms/s/2/94e97eee-ce9a-11e5-831d-09f7778e7377.html#axzz3zzooFxaN



I'm not entirely without sympathy but I do wonder if the apparent nihilism is actually more an unwillingness to take responsibility.

No - I think you lack a complete understanding of the struggles that millennials go through. Our futures are inherently uncertain.

FYI - I am in a positive situation at 27 YO, but only now am I able to even start thinking about a pension.

Our joint household income is around £65k - until we bought our first place with a 5% deposit, we had spent £50k on renting for 5 years whilst saving up a deposit. I am paying £170 after tax a month for a student debt that currently stands at around £17k.

If you have kids like we have you will be paying £500-1000 month on childcare fees - generations before did not have to rely on joint incomes necessarily for maintaining a mortgage.

I am now only thinking about a pension and to be fair only because I am looking at ways to stop me having to pay back some child benefit at the £50k threshold. I've looked at the workplace pensions and if I pay in 5% of salary, my employer will match it. I've worked out that I will have around £250k in 40 years time. Question is - what will £250k mean after 40 years of inflation?

The bigger question is - will there even be a state pension in 40 years time as we know today? The answer is probably no - yet the current generation who will have only contributed to their pensions through NI payments (BTW - I still pay NI!!!) get a triple lock on their state pension.

I don't want to get too ranty as actually I'm quite happy with my lot right now - but it is so clear that millennials are viewed without any respect of the position their seniors have put them in.

As a summary though, for me the two policy pieces that are really cocking up millennial prospects are the pension propositions and the introduction and further expansion of right to buy.

CLAPTON

Jon_B wrote: »

No - I think you lack a complete understanding of the struggles that millennials go through. Our futures are inherently uncertain.

FYI - I am in a positive situation at 27 YO, but only now am I able to even start thinking about a pension.

Our joint household income is around £65k - until we bought our first place with a 5% deposit, we had spent £50k on renting for 5 years whilst saving up a deposit. I am paying £170 after tax a month for a student debt that currently stands at around £17k.

If you have kids like we have you will be paying £500-1000 month on childcare fees - generations before did not have to rely on joint incomes necessarily for maintaining a mortgage.

I am now only thinking about a pension and to be fair only because I am looking at ways to stop me having to pay back some child benefit at the £50k threshold. I've looked at the workplace pensions and if I pay in 5% of salary, my employer will match it. I've worked out that I will have around £250k in 40 years time. Question is - what will £250k mean after 40 years of inflation?

The bigger question is - will there even be a state pension in 40 years time as we know today? The answer is probably no - yet the current generation who will have only contributed to their pensions through NI payments (BTW - I still pay NI!!!) get a triple lock on their state pension.

I don't want to get too ranty as actually I'm quite happy with my lot right now - but it is so clear that millennials are viewed without any respect of the position their seniors have put them in.

As a summary though, for me the two policy pieces that are really cocking up millennial prospects are the pension propositions and the introduction and further expansion of right to buy.

if your employer matches your 5% pension contribution then its an absolute no brainer for you to join the pension.- you will get 10% of salary in a pension for only 3% (with tax relief) contribution- a simply staggering return.
Unless the economy collapses in the next 40 years then you can expect your pension growth to be higher than inflation.

whether there is a state pension in 40 years time will be a decision that YOUR generation (and subsequent) will make and not the evil boomers who will all be dead.

Jon_B_2

I agree with regards the workplace pension. Our employer will match up to 8%, but j can't stretch myself that far yet.

In an ideal world you'd hope the state pension would still be there. Let's face it - the boomer retirement population will be much larger than the current working millennials, so the pension contributions should be less of a burden.

Let's not forget, people who claim a pension today are not really claiming back what they put in the pot 40 years ago, more claiming what's in the pot today.

CLAPTON

Jon_B wrote: »

I agree with regards the workplace pension. Our employer will match up to 8%, but j can't stretch myself that far yet.

In an ideal world you'd hope the state pension would still be there. Let's face it - the boomer retirement population will be much larger than the current working millennials, so the pension contributions should be less of a burden.

Let's not forget, people who claim a pension today are not really claiming back what they put in the pot 40 years ago, more claiming what's in the pot today.

the state pension is a political decision : you will be the voter then but you are right : there is no 'pot' accrued from the past

anyway I would seriously consider that company pension, with matching employer contribution, tax relief and maybe child allowance benefits you will never get a better return. You will be amazed how quickly 30-40 years pass.

Generali

Jon_B wrote: »

No - I think you lack a complete understanding of the struggles that millennials go through. Our futures are inherently uncertain.....
As a summary though, for me the two policy pieces that are really cocking up millennial prospects are the pension propositions and the introduction and further expansion of right to buy.

You aren't acting in the way that the Millennials in the article are depicted.

Also right to buy doesn't seem to have impacted on your situation. A couple earning 2.5 times the average UK would never have gotten a council house.

The extension of student places seems like a crazy idea to me. Better that a university education is free for an elite than is expensive and available to all. What has happened is that a degree is required for jobs that never needed one. Working as a clerk in a bank used to be a classic way in to a well paid career for someone reasonably bright that wanted to leave education at 16 or 18. I can't imagine many bank tellers under the age of 30 don't have a degree these days.

ukcarper

Generali wrote: »

You aren't acting in the way that the Millennials in the article are depicted.

Also right to buy doesn't seem to have impacted on your situation. A couple earning 2.5 times the average UK would never have gotten a council house.

The extension of student places seems like a crazy idea to me. Better that a university education is free for an elite than is expensive and available to all. What has happened is that a degree is required for jobs that never needed one. Working as a clerk in a bank used to be a classic way in to a well paid career for someone reasonably bright that wanted to leave education at 16 or 18. I can't imagine many bank tellers under the age of 30 don't have a degree these days.

That's exactly what happened to a friend of mine left school in the 60s with a couple of O levels got a job in a bank as a clerk and ended up as a bank manager.

Generali

ukcarper wrote: »

That's exactly what happened to a friend of mine left school in the 60s with a couple of O levels got a job in a bank as a clerk and ended up as a bank manager.

When I was at HSBC there were plenty of FX sales traders that had started off filling ATMs. At another bank I worked for, the head of 'exotics' (a senior FX trader that these days would probably make a very solid 6 figure salary these days) started off in the mail room having left school at 16.