Tidying up the mess

Drawingaline

I think people who started wok in the 70's&80's just joined the pension schemes, and most companies had good ones. Then it all went a bit crap and had loads of awful publicity, and with house prices rising sharply and people paying stupid amounts for mortgages there seemed a big shift into people banking on property to see them through. Also as the wartime generation have been passing on and leaving quite decent inheritances (if they owned property) there was again this idea of money to come in the future. But as people are living longer, often needing money for care this bubble is bursting.

Pensions were just never discussed. I know my mum hated the amount my dad was paying in when they were my age and I was a teen, but they are reaping the rewards now. I just wish I had started earlier. I will be hammering it into my kids. The way it is going they may end up supporting us which is not what I want at all. But I am very aware that I won't e able to help my kids like my parents have helped us. No house deposits for them (my parents didn't do that, but my grandparents gave us money over the years, and both sets of parents now pay for some of rhe kids activities).

enthusiasticsaver

BabyStepper wrote: »

Can I ask how you had this all figured out from such a young age enthusiasticsaver? Most of us seem to be faffing around and not getting our acts together until into our 30s, but you started in your 20s. Wow. Seriously impressed.

Thanks and yes we had a plan in our 20s probably because I worked in banking at the time and my Dad was seriously debt averse and encouraged us to budget and forward plan from a very early age. I have done the same with my adult daughters. It changed numerous times when we had children and then moved down to the West Country so the plan was never fixed but we allocated percentages of our income to saving long term, medium term and short term. I say we but I had to encourage my DH as he was a bit more of a short term thinker. He is very grateful now though as many of his peers are still working long hours and travelling lots whilst he is retired.

You make a good point about the government deciding for you when you can retire, if you depend on the state pension. I have lots of female friends who are in a panic over the sudden increase in retirement age for them. It got me thinking about how to bridge the gap between when I might want to retire and when the government says I can. Is that what your 'bond ladder' is for enthusiasticsaver? I had also read that everyone had plenty of notice about the age increase, but most people chose to ignore it or just forgot about it. I'm happy at work just now but who knows how I will feel in my 50s. So many people get tired and just want to stop. I think my retirement age is 68, need to check. Suddenly it all feels very real and not somewhere off in the distant future.

Time creeps up on you and yes you don't know how you will feel in 20 years ago but it will be nice to have the option to go if you want to. I fully expect that you and my daughters will have their state pension age moved several times again. I have a state pension age of 66 but theirs is 68 like you. It does not have to be all or anything. You may wish to work part time but having investments/pensions/savings and no debt means you are in control and not the state. A bond ladder is fixed term cash savings that you may need to bridge a gap between working and pensions being drawn in case the actuarial reduction for taking it early is high. It pays more than cash savings and you have them mature a year apart. So I had a lump sum which I split into three and put one in a one year bond, one in a two year bond and one in a three year bond. As it was the actuarial reduction was not too bad so I drew my pension anyway and invested the bonds when they matured into my stocks and shares isa. It was just a backup plan but it works for many.

You are right that women of my age had notice things were changing in the 1993 budget and many just were not listening or took no notice. Again because I worked in finance maybe I was a bit more aware. Often though people will prioritise other things over pensions and then moan when they have to carry on working. It does not have to be loads. Start small and work up and you have made a good start in getting used to budgeting and getting rid of debt. I had a head start as I had no unsecured debt to start with.



On the matched betting front I have managed to turn my £60 pot into £85 in 4 days. Not too shabby, and once my pot is bigger I can go for the bigger deals. I'm quite enjoying it. We've managed to arrange a shared lift to the wedding that will keep costs down, lower even than prebooked public transport as that would also involve a taxi or 2. I'm all over the wedding budget, we'll be ready to properly celebrate the big day without overspending. This is exactly the kind of thing I might put on a credit card previously. Not any more.

Great result on the matched betting and finding the money for the wedding outside of your budget. I would not know where to start on the matched betting. Wonderful that you not borrowing to do that stuff any more.

enthusiasticsaver

Drawingaline wrote: »

I think people who started wok in the 70's&80's just joined the pension schemes, and most companies had good ones. Then it all went a bit crap and had loads of awful publicity, and with house prices rising sharply and people paying stupid amounts for mortgages there seemed a big shift into people banking on property to see them through. Also as the wartime generation have been passing on and leaving quite decent inheritances (if they owned property) there was again this idea of money to come in the future. But as people are living longer, often needing money for care this bubble is bursting.

Pensions were just never discussed. I know my mum hated the amount my dad was paying in when they were my age and I was a teen, but they are reaping the rewards now. I just wish I had started earlier. I will be hammering it into my kids. The way it is going they may end up supporting us which is not what I want at all. But I am very aware that I won't e able to help my kids like my parents have helped us. No house deposits for them (my parents didn't do that, but my grandparents gave us money over the years, and both sets of parents now pay for some of rhe kids activities).

Very true drawingaline. Pensions were generally very good in the 80s. Both DH and I had good final salary pensions which were tinkered with over the years and the housing bubble has meant bigger and bigger mortgages but interest rates have never been this low for so long.

I am afraid I am going to sound really old now but my generation who grew up in the 60s and 70s were used to making do with second hand or gifted furniture and waiting to save for things like cars (always cheap never the expensive PCP deals many quite young people go for now). Our first new sofa was bought with my husbands relocation allowance when we moved from Surrey to Cornwall. Until then we had second hand from my parents. I was almost 30 then. I don't think that happens as much now and certainly we rarely did holidays until we were more financially secure unless my mum and dad paid or we saved for it. Now we do the same for our family.

There are quite different expectations now and priorities. This is encouraged by the media and the government who don't want us saving for the future but spending and holding up the economy.

Good that your parents do help you out at least though and that you will be giving your kids the right message. Avoid debt and save for the future whilst living a bit too. A balance as in everything.

BabyStepper

Drawingaline there was a big pensions crisis, before my time but people talk about it still, where pensions were stolen, apparently. Maybe that shifted public opinion about how to save for retirement. Also house prices, that's very true, they got completely out of hand before I was anywhere ready to buy a house. We only have ours because the market fell spectacularly where we live and also OH's parents helped us with a deposit. But lots of our friends have given up hope of ever owning a house. It's very sad. I feel a real sense of security with ours. We love it so much. :heart2:

The more I learn about managing money, the more bizarre it seems that we are not bombarded with info about pensions, savings, how to manage money. I've been watching adverts on tv and can honestly say I do not relate in any way to the financial products being promoted. These adverts need to speak to people like me! Who on earth wants a pay day loan at 2000% or to buy a gold bar?? It's madness. Although I am enjoying nationwide's new advert about 'pay day' being 'save day'. I hope people are taking that in.

enthusiasticsaver I would have thought that if you have some time on your hands, and with your head for numbers, you might enjoy tinkering with matched betting just for the fun of it. You'd likely be a whizz at it!

BabyStepper

Also meant to ask, is the bond ladder a product specifically for bridging that gap between retirement age and state pension age? Or did you just use it for that?

enthusiasticsaver

BabyStepper wrote: »

Also meant to ask, is the bond ladder a product specifically for bridging that gap between retirement age and state pension age? Or did you just use it for that?

It is one way you can bridge the gap certainly but there are others.

Some use stocks and shares isas but I would not like to take the chance that the market wasn't low and cashing out at that point is not advisable as it consolidates losses.

Some save in cash but with low interest rates that was not an option for us either. We keep cash for emergencies and some for complementing our pensions but leaving the bulk of our money in that seemed counter productive.

Some leave their occupational pensions as long as possible in case there is any actuarial reduction (if defined benefit) but with defined contribution that is not so much the case. Same with SIPPs and often people will draw down the 25% tax free amount and live off that for as long as possible and then drawdown on their pensions in a tax advantageous way (ie up to their personal allowance each year). This is why it is beneficial to make sure if you are married both of you have pension provision so you can make best use of the personal tax allowances for both of you when the pension is in drawdown.

I may investigate the matched betting but I don't seem to have as much spare time as you would think even though I am retired




The fixed term bonds are just ordinary bonds. Tesco were doing some at reasonable rates when we invested as were Virgin Money. I don't think there is a specific product for bridging early retirement and many use a combination of the above.

enthusiasticsaver

BabyStepper wrote: »

Drawingaline there was a big pensions crisis, before my time but people talk about it still, where pensions were stolen, apparently. Maybe that shifted public opinion about how to save for retirement. Also house prices, that's very true, they got completely out of hand before I was anywhere ready to buy a house. We only have ours because the market fell spectacularly where we live and also OH's parents helped us with a deposit. But lots of our friends have given up hope of ever owning a house. It's very sad. I feel a real sense of security with ours. We love it so much. :heart2:
It is difficult for young people to buy in our area as it is expensive. We helped our daughters with deposits but I feel for those who cannot get parental help. Glad your OH parents were able to help you too. There is nothing like the security you get with owning your own house especially when the mortgage is paid off.

The more I learn about managing money, the more bizarre it seems that we are not bombarded with info about pensions, savings, how to manage money. I've been watching adverts on tv and can honestly say I do not relate in any way to the financial products being promoted. These adverts need to speak to people like me! Who on earth wants a pay day loan at 2000% or to buy a gold bar?? It's madness. Although I am enjoying nationwide's new advert about 'pay day' being 'save day'. I hope people are taking that in.

I think there are various reasons why saving and pensions are not advertised and sadly I think it is because the banks really do not need our savings as they can get their money to lend out to borrowers from the money market. It is not really in their interests to encourage savings which is why rates are low. The government is complicit in this. The payday loan advertising to be frank is absolutely disgusting I think and by seeing it advertised on TV I feel very much that many vulnerable people think this is normal to borrow at those rates. I do see the odd credit union advert occasionally though which is better. Why pensions are not advertised is possibly because it is so highly regulated they cannot promise any concrete returns and history has shown that most people consider them boring. I am only surmising though.

enthusiasticsaver I would have thought that if you have some time on your hands, and with your head for numbers, you might enjoy tinkering with matched betting just for the fun of it. You'd likely be a whizz at it!

Not so sure about that but will explore it. I once had a full and frank conversation with a statistician about gambling and how it never pays off even to the point that he would not do the lottery. I used to work in a mathematics department in a university and a lot of the academic staff were very dismissive. Is matched betting actually gambling or is it like hedged investments? Betting on one thing and then countering it with another?

Drawingaline

I was actually talking to my 15yr old last night about pensions. She is awesome at budgeting and saving already (she has a budget on my ynab) and I was telling her she needs to start a pension the minute she gets a full time job. I also mentioned that me and her dad won't be in a position to aid her financially once she is independent. Obviously we would never see her hungry or homeless, but I don't think we will be in a position to help grandchildren with dance lessons like my parents and in laws do.

Anyway, I am going to carry on concentrating on my own debt and budget plan, we have a possible financial thing in Jan which will lower our income, but might not. Once I know what is going on with that I will be properly looking into my own pension and future saving needs. Until then I will carry on with my priorities as they are.

But have enjoyed this discussion as a way to get me to think about how I will go about it all.

savingholmes

Thanks for the pension discussion and for sharing ES. My understanding of matched betting is that you bet one way and then bet the other in such a way as to cancel the risk of the first bet. Nichelette has recently done a really good post on it in her diary.

Good luck Babystepper. I need to have another go at match betting

girlatplay

I've been shot down for this before (not here, on another thread) but I'm going to say it anyway. I started a pension for Little Miss Gap when she was 12. I'm only paying in £10 a month at the moment (and trying desperately to offload it to her as she is now 18 and I want her to take responsibility for it) but I think that every little counts. I was told it was a daft idea and that I should be putting the money in savings for her, not a pension. The Dad of a girl I used to work with started his pension at age 16 and was retired before 50. I don't know the full details (I imagine he paid in a lot more than £10 per month) but it always stuck with me and I wanted to give LMG a decent kick at the ball.