Life Expectancy and Pensions

Prism

Theta101 wrote: »

I've seen this £20K figure somewhere else but couldn't understand how it's made up.
It seems far too high for the "average retirement income". I assume it's for an individual and not a couple.

I've also seen that the average pension pot is £50K.

The 2 figures just don't make sense.

Ok here is an example based on the US stock market (the only one I have 40 years of stats for)

Lets say 40 years ago you decided to put away £80 a month into a pension and invested it in equities. The government tops this up to £100. You increased the amount slightly each year by inflation. The value of that today would be worth around 1.5 million pounds. Had you done the same without a pension then it would be worth around 300k less.

You can do a lot with that amount of money while retired. Even if someone chose options with a lower return then its still a huge opportunity for a happy retirement.

OldMusicGuy

singhini wrote: »

What do others think?

I think you are looking for excuses to justify not taking responsibility for your future self. Don't worry, it's very common, it's called temporal discounting. As others have pointed out, you are using out of date research and misusing statistics to justify not saving for your future.

There is more flexibility in pensions than there has ever been, there are more options to manage your money effectively than there have ever been (and I am speaking as someone who has just retired). The reason the government places age restrictions on accessing pension funds is due to the tax benefits, and that's perfectly fair. If they didn't do that, people would use the system to avoid paying tax. If you want to build up tax free savings that you can access any time, use your ISA allowance. A savings strategy that combines ISAs and pensions makes a lot of sense.

I consolidated pensions without using an FA and it cost nothing. But I don't have any DB pensions. If that's what you have, count yourself very lucky. The restriction there (use an IFA for advice before cashing in a DB pension) is to make sure people don't throw away important long-term benefits due to temporal discounting.

Linton

Theta101 wrote: »

I've seen this £20K figure somewhere else but couldn't understand how it's made up.
It seems far too high for the "average retirement income". I assume it's for an individual and not a couple.

I've also seen that the average pension pot is £50K.

The 2 figures just don't make sense.

Does it account for people having more than one pension pot or is it simply the average of all pensions?

Is it an average over everybody independent of age when what is important is the average total pension pot at retirement?

Dorian1958

Clifford_Pope wrote: »

Genes - to the extent that there is say a North/South genetic factor, this might have some correlation

Eh? First I have heard of this. As a Northener should I be worried??

westv

Your post code may indicate that are more likely to be in a group that has poor lifestyle choices but it doesn't mean that you will do.

GunJack

Dorian1958 wrote: »

Eh? First I have heard of this. As a Northener should I be worried??

Possibly....there is more than likely still an element of the effect of a much higher proportion of Northern/Welsh having worked for many years in heavy industries like coal & steel...something the majority of the southern softies managed to avoid

davieg11

Prism wrote: »

Ok here is an example based on the US stock market (the only one I have 40 years of stats for)

Lets say 40 years ago you decided to put away £80 a month into a pension and invested it in equities. The government tops this up to £100. You increased the amount slightly each year by inflation. The value of that today would be worth around 1.5 million pounds. Had you done the same without a pension then it would be worth around 300k less.

You can do a lot with that amount of money while retired. Even if someone chose options with a lower return then its still a huge opportunity for a happy retirement.

Sounds good that but 40 years ago my parents got less than £80 per week and dreamed of winning £100k on the pools so that they could retire.

Silvertabby

Clifford_Pope wrote: »

Post code is an easy and approximate short-cut to other factors:

Genes - to the extent that there is say a North/South genetic factor, this might have some correlation

Lifestyle - strongly related to post code, surely?

Luck - luck's what you make it, and educated people in good jobs in nice areas in nice climates have more luck

I grew up in the North and know Blackpool well. My parents and sister thought a day trip 'to see the lights' was a huge treat, but I couldn't stand the place - all stinky fried food and people walking down the street swinging their filthy fags around.

Of course, you may say that these people only smoked and ate c**p on holiday - but as my parents were also afficionados of working men's clubs (smoke so thick you couldn't see the 'turn' and huge pork pies sold as bar 'snacks') I would have to largely disagree.

As for luck, it's funny but I have found that the harder I have worked the luckier I have become.

westv

Silvertabby wrote: »

As for luck, it's funny but I have found that the harder I have worked the luckier I have become.

Hello Samuel Goldwyn!

longleggedhair

From my experience, the biggest risk for most people is their 50s. I have known many people who die in their 50s but it seems if you can make it past that you've got a good chance of going onto your 80s/90s.

I've always felt uncomfortable about investing in a pension, but I always have done as the above people say it's a no brainier financially, and as you get older and 55 becomes closer I feel less uncomfortable about the length of time it will be "locked" away.

I have considerable investments outside of my pensions, and some company & private pensions which would be insufficient on their own. My intention is to move as much of my cash in the next few years into my pension/ISA. But you have to do what is comfortable for you.