Is starting a pension like taking a gamble on the future?

AnotherJoe

cns06 wrote: »

Personally I think cash savings are very important. However I would not save anything (other than emergency fund) in cash if your T -40 years from retirement. Inflation will have a massive impact.

However, once you get to within a 10-15 year window I think that's the time. Each to their own but that is hugely conservative. You'd likely miss out on 25 years growth since few will immediately take an annuity. . Most pension advisors will do the same with your pension, usually a bit closer to the time though, 2-3 years ish.

The main risk factor for me with pensions is not tax, but the actual age at which you can access it. For someone who is 18 now I would expect SIPP RA to be well into the late 60s. Pretty scary stuff IMHO.

I cant say what will happen in the future though, and no one can.

However having savings, pensions etc is almost certainly going to put you into a better position.

Thats what they were doing. That's all,changing now since many people will still be invested and using drawdown for many years before gettting an annuity.

In my company scheme for example, which only started in 2011, all those who were on lifestyling products which were designed to start moving people gradually into cash from 5 years of retirement date, are now being given personalise advice that that is likely not the best plan any more amd to stay a similar evel of risk as before. Maybe dial it back a but but certainly not moving into cash.

cns06

Your comment ref 25 years growth is not correct for my (any many peoples) circs, some of us want to stop work with a bang and spend a fair bit of wedge in the process. I plan on spending at least 1/3 of my net worth over the first few years of retirement. I have not saved for years to get a few extra pounds a month when I am 95. But everyone is different.

Superscrooge

Is starting a pension like taking a gamble on the future?

Not starting a pension is taking a bigger gamble on the future!

Bootsox

This biggest variable in all this, and hence the biggest factor to gamble with, is your own longevity.

Some things will be within your control, some won't, examples :

• Do you keep fit, drink little, watch your weight and are a non-smoker?
• Is your blood pressure within normal limits?
• Do you avoid dangerous activities/occupations?
• Have you good genetics, e.g. are older family members hale and hearty?

If these are mainly yeses get pension saving fast!

AnotherJoe

cns06 wrote: »

Your comment ref 25 years growth is not correct for my (any many peoples) circs, some of us want to stop work with a bang and spend a fair bit of wedgein the process. I plan on spending at least 1/3 of my net worth over the first few years of retirement. I have not saved for years to get a few extra pounds a month when I am 95. But everyone is different.

Then you will pay a massive wedge of tax in the process, losing out on many of the benefits.
Very likely you'd be better off taking / having a loan for your wedge spending with a bang, and paying it off from lower pension drawdown payments, minimising the tax you pay and maximising the use of your savings. This would also allow you to increase the time over which you can grow your pension, giving you more wedge to spend, whether that's in a spectacular flurry or at age 95.

LHW99

The main risk factor for me with pensions is not tax, but the actual age at which you can access it. For someone who is 18 now I would expect SIPP RA to be well into the late 60s. Pretty scary stuff IMHO.

However it appears average life expectancy by 2030 would be around 85-87, and for those aged 18 now, it is likely to be higher still. Keeping the SIPP RA (and SPA) unchanged would hardly be sensible, especially as average health in the 60's and 70's is also likely to be better.
More reassuring than scary IMHO

RuleTheWorld

does that fair wedge early model rely on the 25% tax free which is by no means certain to always be there

Thrugelmir

joujou wrote: »

Saving your money in cash is a huge gamble on its value in the future. Cash is extremely risky.

Better than simply spending what you earn or borrowing money. Saving of any kind is a good discipline to adopt.

badmemory

All life is a gamble but what would you rather bet on. You are going to live well into your nineties (I do mean live not just sit there) or you are going to pop off this mortal coil before you reach pension age. I know which I would choose. This involves making a plan - a good one too.

bigfreddiel

I'm going to do what you asked for, you are being stupid. Start a pension now. It's free money. Good luck fj