Pension won't be enough - realistic alternatives?

AlanP_2

David.s wrote: »

I think you have received correct information from your calculator. If you retire at 68 you can expect to live for approx. 16-18 years depending on where you live in UK and family health record. (Can anyone confirm this I am interpolating from life expectancy at 65.) So you need to save 17 years salary over 42 years. That's 40% of your salary each year. You are saving 12% with employers assistance. However, your employer is probably paying 13.8% of your salary as NI and you will be paying some NI too (around 12%?) which is also adding to your pension pot. Near the 40% mark. If your pension pot is rising faster than inflation, wow does anyone achieve that??) then you will probably reach your goal. There are so many variables who can really say where the world will be in 42 years time?
I remember reading a Consumer Assoc "Which " report in the early 1960's which said that investing in a pension below the age of 45 is bad value as you will be losing money up to that age due to professional fees. Pension pots benefit most from the last few years investments, especially the final year. According to "Which" of that date. So you can top up late in your working life if you wish.

What applied in the 1960s is not necessarily relevant nearly 60 years later though.

If the OP could afford to put £500 pm into a pension for 42 years that would be fantastic and they would likely end up with a pot worth more than £570k at say 3.5% growth p/a so allowing for some inflation and some charges.

At a 4% withdrawal rate that would be £22,800 per year so with ~8k of state pension £30k a year income or £2500 per month. At the moment they bring home £1300-£1400 so I don't see how your statement about the calculator being correct is a valid interpretation of the situation.

[Deleted User]

dunstonh wrote: »

Those providers may only have 5000 people on a product type and losing around 100 policies a year (which will accelerate). Also, a lot of those use shared systems and not individual systems and are in more profitable areas.



its not hidden at all. They were just not created in a time when the internet existed.

Apple is on the Iphone 6. Do you see people with Iphone 1 or 2 being able to do things that the Iphone 6 can do? No. They need to change their product. A black and white tv cant become widescreen HD.

Many modern providers are more modular in their coding and product provision and can continually adapt their product. However, older products cannot do that without significant investment. Investment that is likely not to be viable when the product is no longer available.



All of those providers have legacy/heritage. Aviva spent over a billion on IT upgrades and still couldnt get all their old systems on to one system. There comes a point when you have to leave old business where it is and give the choice to the person to move it if they want to. Also, all those providers have rather naff online systems too. Even on their new business offerings, they are behind many on the online side. I am not excusing them. I just understand the commercial reality of not spending hundreds of millions of pounds bringing small pockets of policies onto a modern system when you will never recover the money spent.

Ironically, I just received an email from FL telling me that my problem is one of those that is being fixed with the changes going on this week. So, blame me for it being down!!!!

Many thanks for the comprehensive reply, I am of course playing devils advocate here

dunstonh

jeepjunkie wrote: »

Many thanks for the comprehensive reply, I am of course playing devils advocate here

You are not allowed. That is my job normally.

jamesd

Arthien wrote: »

We started with 95% and I believe we're at 85% now. We've got a fix until the end of the year, so I don't think we'd gain much by remortgaging a few months early at 85% as the early repayment fee would outweigh it. We'll then make a decision about whether to move or get another short fix and carry on building up equity.

Yes, probably not worth remortgaging early and paying a penalty. You'll probably want to get a new property valuation as part of a new mortgage deal and if prices have increased that could well further improve your LTV. It is worth taking a look at the possible deals at lower LTV because the difference between 95% and 85% can be substantial, even enough to be greater than an exit charge.

One thing you can do if you don't quite make a LTV threshold is use some credit card borrowing. The card money will reduce affordability but by now affordability isn't an issue for you any more and the LTV reduction would be of more value. 0% for spending cards can be an ideal tool for this, just spend all possible normal spending on them and save the money not being spent, or at your mortgage rate, overpay with it. If this gets you to under 80% or even 75% it'd be a really good move.

Arthien wrote: »

I have previously considered giving up the pension contribution in the short term, but I can see it never getting started again, as there's always something else that needs paying for. At least this way I know both are being covered, and the focus is still on the mortgage.

True, though sometimes if you commit to doing it only for a set time it can be useful.