The Death of Retirement

uk1

RickyB2000 wrote: »

But do you think instant gratification is due to the ready availability of cheap goods today? Instant gratification and the purchase of the latest tech is not the preserve of the young - I know many middle aged people who do exactly the same. So isn't it because these options were not there in the past rather than a change in attitude of the young that the old don't have?

There is also the fact that having a lot of stuff doesn't mean you are spending more. Someone on average wage could buy what, 3-4 iPhones a month if they wanted. In the early eighties a VHS would cost a months average wage. I think it is hard to judge what % of income is spent on instant gratification today compared to before based just on the amount of stuff people have.

I don't know the answers to these, just posing the question. I do agree most people need to plan and plan hard - 5% into a DC pension is not going to be enough! They are sleep walking to potential poverty

There is a long answer and a shorter answer.

My shorter answer.

Everything now is faster than it was before. Travel, communicating with others, feedback, buying things, "stardom" etc etc etc. People today do not tolerate the lower speeds of everything that we found normal. I just ordered a whole lot of stuff from Amazon. It will be delivered to me tommorow ... for free. No reading lot's of purchased magazines from W H Smith for research and then off to the shops comparing prices. I just completed my Ocado order. It will be here tommorow at 8am all fresh and perfect and the delivery is nearly nothing in cost. If I have a complaint, I don't have to take it back to the shop. No driving t town and going from sho to shop. Everything is now instant. You bank online and send cash instantly. You take a photograph whilst on holiday and send it to friends instantly or share it with total strangers instantly. You book a flight instantly. You don't send a letter and wait a week for the reply, you send an email or text and tap your fingers waiting for the reply.

I think all this has lessened that gene that was in us that was patient for enjoying things in the future by sacrificing today, with one that is more impatient for the speed of gratification when making a sacrifice now.

Jeff

fc123

mgdavid wrote: »

What an extraordinary statement!
Do you not think 'funding our own lifestyle and choices' includes making provision for retirement, with full risk analysis (ie discounting the level of SP). With suitable planning you can retire whenever you like...
Why do you say 'may not live long enough to get anything out'? Did I miss the government's green paper on state euthanasia at 70?

? Why is it so 'extraordinary'? Where did I state that we hadn't also made provision for our retirement?

There is a little bit of a Smug Cloud hanging over this thread (but then this can also the case on other MSE boards) whereby the regular clique of posters cluster and agree with each other and dismiss any other viewpoint or feeling that a newcomer to a board may dare to post.

''With suitable planning you can retire whenever you like...

I suppose that could be true (and must be for those who inhabit this board as they post about their perfect plans) but the average earner who has to start out with nothing, buy a house, deal with a few of life's unlucky blows etc. probably has less choices.

Our Lifeplan had a Demi -Retirement in 3 years time and then I thought we could just choose when to stop completely...maybe in our mid 60's. I put in the SP amount for our top up income; the bit that made life nicer.

dunstonh wrote: »

Yes it is a generalisation but a fair one.

Sorry to burst your bubble but living standards 3 decades ago were lower than today. Don't think that the same family pressures that exist now did not exist back then. Mortgage repayments were more expensive relative to real terms money and whilst the amount borrowed today is a little higher in real terms, it is not that far off. Utilities were a bit cheaper but consumer goods were more expensive. You didnt have so many consumer items to spend money on so easily. Make do and mend. Family hand downs etc were far more common. Buying your first house meant living in house with virtually no furniture other than the things gifted by parents and you gradually improved.



The Govt has made no significant changes to people aged 52/53 and the state pension has only ever been there to bring you to a minimal standard of living. Nothing has changed in that respect.



If you choose to fund your lifestyle instead of your retirement then that is your choice.

So where in my post did I say anything to merit that response from you? Why do you think I need a mini lecture about living costs /standards 20/ 30 years ago? Don't you think I lived through exactly the same?

It's a shame as I have high regard for a lot of your posts as I come across them frequently and the advice is always very well stated and easy to understand.

I think I was misunderstood about the statement 'funding our own life' as I have read the posts of people who do max salary sacrifice into their pensions (one poster puts in 80 odd % I think) then claims tax credits on his much reduced wage to fund the bulk of his life today.
We didn't have tax credits etc. never signed on, didn't even use the state education system (though I know that's a choice). We even had a council flat that we returned to the council when we bought our 1st house back in the Olden Days. Others would have sold the keys or sublet it.



The article says that under 55 the retirement age will increase to 75 so there will be changes.

EdSwippet wrote: »

I worked 40 hour five-day weeks for over three and a half decades, saving assiduously for a comfortable retirement. I now have reasonably secure pension savings that should see me through, barring perhaps a horrible 'black swan' event.

But here's the thing -- if I had my time over again, starting today, I am reasonably certain I would choose to live more and work and save less now, in exchange for doing that over five decades.

The lifetime tax and national insurance bite is significantly less. Up to a point you can control your own time. You can travel, learn, kick back, and do other stuff while you are still young enough to make it count. And most importantly, once you've done it nobody can take a travel or other life experience from you, whereas retirement plans and savings are constantly chipped away by successive governments, and remain permanently one grasping and ambitious chancellor's decision away from decimation or entire destruction.

I understand what you mean......your post has really made me think too.......it's a hard one though we never had the choice to do fun things and travel etc as we had our family young (hence wanting to go Demi Retired / Lifestyle biz aged 55 and then do some fun stuff aged 60 +).



I am going to say a shameful thing though.....the Cloud can hang over me again.....but I had in our sums the SP being our Fun Fund.
The basic living costs are done (we own a property outright)+ our main home will be paid off in 2 years. This will be swapped for a seaside home with annex (same value).

It's the Fun Fund that could be delayed to 75 so maybe I shouldn't be so cross.

So can everyone be nice to me now so I can start posting on this board to get a new plan together.
I need a plan to make up the £300 pwk shortfall from aged 65/67


We have to set up a NEST this summer for staff and we don't know who to get to run it. A pensions adviser recommended by our acct or leave it with Govt.

mania112

fc123 wrote: »

I need a plan to make up the £300 pwk shortfall from aged 65/67

find an adviser at https://www.unbiased.co.uk and they will make a plan for you.

fc123 wrote: »

We have to set up a NEST this summer for staff and we don't know who to get to run it. A pensions adviser recommended by our acct or leave it with Govt.

The government don't run anything. They offered NEST out to tender, and Tata took it (yeah, that company who have nothing to do with Pensions), but at least there is now a 'default' the government can point people to.

The biggest problem with Auto-Enrolment is the extra burden on payroll.. so if that's handled externally, ask them for their help. They'll probably have a strategy they want their clients to use to make their life easier.

mgdavid

fc123 wrote: »

? Why is it so 'extraordinary'? Where did I state that we hadn't also made provision for our retirement?
........

It seems clear that you have not made sufficient provision for retirement otherwise you wouldn't be posting.

You have ignored the most important point of my post, i.e. doing the risk analysis as part of planning. Unfortunately you appear to have made assumptions about SPA which are turning out to be wrong. Given the announcements over 20 years ago about equalisation of SPA for the sexes, the obvious increasing life expectancy and resultant plans to increase SPA, the writing's been on the wall for a while.

I'm also finding it difficult to reconcile your hard-done-by feelings about waiting a few extra years for your SP with the admission you've spent a shed-load on private education. As you rightly say, your choice, but you have left yourself little or no margin for error in the pensions planning department.

Triumph13

fc123 wrote: »

The article says that under 55 the retirement age will increase to 75 so there will be changes.

Sorry, but where are you getting this idea that your state pension age is going to go up to 75? The Royal London article talks about people having to work to that kind of age to achieve a certain income level if they only make minimum pension contributions, but it doesn't talk about state pension being delayed to that date and certainly not for someone already in their 50s. No-one is talking about that kind of delay for that age group. I'm 3 years younger than you and I'm working to a probable SPA of 67 and worst case of 68.

dunstonh

I suppose that could be true (and must be for those who inhabit this board as they post about their perfect plans) but the average earner who has to start out with nothing, buy a house, deal with a few of life's unlucky blows etc. probably has less choices.

They have the same choice they have always had. The choice to live a certain way today at the expense of provision tomorrow hasnt changed. What has changed is that people are more willing to spend today and ignore tomorrow than they used to be.

I have been an adviser for over 20 years. When I started out, regular contribution pensions were frequently arranged and topped up most years. Now, you barely ever see them other than for the self employed. Back then, parents would get you to come and see their children as they turned 18 or started their first job to get you to do a pension for them. Nowadays, parents dont seem to care as much. Another thing that was more popular back then were medium term investment plans. £10pm back then put aside for 10 or 15 years. Doing them every few years so that they matured every few years when they were older. Again, not common nowadays.

Why do you think I need a mini lecture about living costs /standards 20/ 30 years ago?

Because you painted a picture that made out that people today have harder lifestyles than in the past. At least, that is how it came across. However, you have hinted at it again with your comment about average earner starting out with nothing.... That has always been the case.

jamesd

fc123 wrote: »

I suppose that could be true (and must be for those who inhabit this board as they post about their perfect plans) but the average earner who has to start out with nothing, buy a house, deal with a few of life's unlucky blows etc. probably has less choices.

All it takes for a person from minimum wage through average income and even above that to get to or above the gold standard 66% income replacement rate is to pay in as much as the auto-enrolment default contributions for a full working life, then defer their state pension and get even a poor on going 1% investment return on the rest. The cost of this is just 5% of eligible income, not even 5% of all income.

fc123 wrote: »

So can everyone be nice to me now so I can start posting on this board to get a new plan together. I need a plan to make up the £300 pwk shortfall from aged 65/67

Please do. People tend to be surprised at just how good their positions are.

fc123 wrote: »

We have to set up a NEST this summer for staff and we don't know who to get to run it. A pensions adviser recommended by our acct or leave it with Govt.

What you really have to do is set up an auto-enrolment pension. NEST is one of the three main providers aiming at this market for lower earners and NEST is required by law to accept all comers, profitable or not. It has a cap on contributions and a ban on transfer in and out until age 55 combined with quite high fees so it's not usually going to be the best choice for serious employers. It's ideally suited to a person whose only employee is their nanny. For others I'd generally describe it as the option of choice for employers who don't care about their employees or who are too lazy to do any research. NOW: Pensions is the one that I think is broadly offering the best deal, notably allowing transfers out whenever desired so employees have the choice about where to put their money if they don't like the one decent investment selection that it provides. Another leading provider is The people's pension. Either of those would probably make your life easier and employees happier.

uk1

dunstonh wrote: »

They have the same choice they have always had. The choice to live a certain way today at the expense of provision tomorrow hasnt changed. What has changed is that people are more willing to spend today and ignore tomorrow than they used to be.

I have been an adviser for over 20 years. When I started out, regular contribution pensions were frequently arranged and topped up most years. Now, you barely ever see them other than for the self employed. Back then, parents would get you to come and see their children as they turned 18 or started their first job to get you to do a pension for them. Nowadays, parents dont seem to care as much. Another thing that was more popular back then were medium term investment plans. £10pm back then put aside for 10 or 15 years. Doing them every few years so that they matured every few years when they were older. Again, not common nowadays.


Because you painted a picture that made out that people today have harder lifestyles than in the past. At least, that is how it came across. However, you have hinted at it again with your comment about average earner starting out with nothing.... That has always been the case.

May I also remind you that this mentality prevailed even further down the wealth line a little further back in time but largely dissapearing in the 60's.

We often forget about Industrial Branch Life Assurance Companies such as Royal London, Liverpool Victoria, Oddfellows, The Pru, etc. Thse were companies who simply collected the premiums from customers in their own homes on a regular basis.

The Pru if I recall had a picture of an Industrial Branch weekly premium collector in a hat as the logo. (Mostly) Men with bulging pockets full of coppers would be visiting working class people in their homes collecting pennies and shillings for weekly endowment policies ( "Penny Policies" ) that would mature in 25 years time. Ostensibly deep working class people living in tenements often in abject poverty with hardly any disposible income at all finding enough cash to not just ensure that the burden of their funeral doesn't fall on their children but additionally putting a few pennies into savings acccounts for themselves and often their children and grandchildren. It was a great moment of pride when a new policy was taken out for a new baby. All savings accounts books kept behind the clock in the lounge for the next collection day.

The need to save for the future was deeply instilled in that generation because there wasn't the same welfare state, there wasn't this rediculous indignant, obstinate sense of personal entitlement irrespective of any obligations to contribute, they didn't want to be a burden on others, they wanted a little nest egg in retirement and they had a great sense of personal dignity however poor they were.

EDITED: And let us not forget Savings Stamps. Children being brought up from a very young child to buy a saving stamp each week with their "pocket money" often at school or a weekly visit to the post office for eather a Prince Charles (2 shillings and 6p Stamp or a Princess Anne stamp at 6 pence. These stamps were licked and placed into a savings book and would be taken out and gloated over. "This is your pocket money ..... remember .... save a little and spend the rest". A little nest egg for the future.

imho

Jeff

David.s_2

I seem to remember inflation going to just over 25% and basic rate mortgages maxed out at 18%. We got a salary increment every month at the time. However, Direct Debits were not in fashion at the and my standing order remained at 8% where it started. I still got tax relief on the 18% and my asset was going up faster than that. No worries. The Building Soc kept sending me letters about how my mortgage was going to take 500 years to pay off but I moved house and started again with no ill effects. Those who kept up with the high interest plus capital payments paid off half their mortgage in 3 years in real terms.

I am still trying to get the hang of this site so apologies if this goes wrong.

David.s_2

How do you get those nice pink boxes?