Early Retirement - (nearly) one year on

uk1

happyandcontented wrote: »

Again, you refer to a 'more difficult environment to own a home' but that is not our experience. It may be yours, but it is not universally true.

I haven't said it was universally true did I ie it is true for "everyone"? I generalised. Your notes again appear to contradict my general observations because of your own singular experience.

So - to be clear - are you simply saying that home owning for youngters is not generally more difficult for the majority of youngsters today which seems to me to be contrary to what is gnerally reported, because of your own personal experience or are you claiming that you believe that it is generally easier today for the younger generation to buy homes than it was for earlier generations?

When I was in my early 20's and worked for a corporation virtually everyone I worked with had a mortgage and made defined benefit pension contributions. Do you think the same would be true today?

mgdavid

lisyloo wrote: »

.........
It's probably not allowed anymore but I started an evening job at 13 and delivering papers at 14, a saturday job at 15.
..........

That struck a chord with me - as a result of a similar conversation to this, I recently worked out that I had seven (7) different paid jobs between the ages of 12 and 18 whilst still at school!
Fortunately the same work ethic was handed down to both my sons.

mgdavid

uk1 wrote: »

.......
So - to be clear - are you simply saying that home owning for youngters is not generally more difficult for the majority of youngsters today which seems to me to be contrary to what is gnerally reported, ............

home owning for today's youngsters NEED not be more difficult - but there are a number of reasons why it may appear so, mostly self-inflicted.
- poor choice of subjects studied and therefore later earnings potential
- sense of entitlement to a new property with all mod cons, furnishings and fittings
- reluctance to put any graft in and take on a fixer-upper
- reluctance to go without many other expensive but optional items of spend, eg foreign holidays, latest gadgets, new cars, etc etc

just for starters.


BTW I trust you don't believe everything that 'is generally reported' to be true - I thought Brexit had busted that lie wide open!

caveman38

mgdavid wrote: »

home owning for today's youngsters NEED not be more difficult - but there are a number of reasons why it may appear so, mostly self-inflicted.
- poor choice of subjects studied and therefore later earnings potential
- sense of entitlement to a new property with all mod cons, furnishings and fittings
- reluctance to put any graft in and take on a fixer-upper
- reluctance to go without many other expensive but optional items of spend, eg foreign holidays, latest gadgets, new cars, etc etc

just for starters.


BTW I trust you don't believe everything that 'is generally reported' to be true - I thought Brexit had busted that lie wide open!

Except you exclude a very important one - LOCATION

Thorsson

uk1 wrote: »

http://www.opalliance.org.uk/archive/decline.htm

That's about the decline in defined benefit schemes, which I already noted, not a decline in those in pension schemes in total. There are many fewer who are in the happy position of being in a heavily funded DB scheme, but that was a minority in any case. Of all the people I know, only one has a full DB scheme and he doesn't need it, due to having no kids and working in the City with big fat bonuses.

Look at Chart1 and Chart4 here.

Or this headline from the ONS in 2018:
Pension participation at record high

It goes on to say that contributions cluster at minimum levels - but years ago those people wouldn't have had a pension at all.

Just like the situation on housing, the position is nuanced. To simply claim that everyone (or even most) today is worse off, pension-wise, than they were 35-40 years ago is a vast oversimplification. Their challenges are different; they are worse off in some ways, but better off in others.

Thorsson

caveman38 wrote: »

Except you exclude a very important one - LOCATION

If by location you mean London, you are correct. House prices there are beyond a joke, which is a failure of policy by both local and national government over many years.

However, despite this, there are more young people living in London than ever

The average age in London, the sixth youngest city, is 36.5, compared to the national average of 40. Over the past 20 years, younger people have increasingly chosen to live in urban areas, while the share of older residents in cities has fallen. In 1996, 58% of people aged 18-34 lived in cities, but this had risen to 62% by 2016. URL="https://www.bbc.co.uk/news/uk-43316697"]Source[/URL

Or look at the graph here.

Or this from a Parliamentary research briefing: People aged 25-34 (millennials) are more concentrated in London than in any other region of the UK.

Yes, part of the reason property prices are so high in London is paradoxically that so many young people want to live there.

Thorsson

rosiest wrote: »

thanks. yes it is salary sacrifice and I'm a high rate tax payer. upped it from 6% to7% in Nov and will do again in April. my mortgage fixed doesn't feel great I think it's 2.7% but due for renew June 2020 and will be under 50% ltv then so looking to get a better rate and take 5 years off the term. Will look into upping pension . my works 12% contribution is at its max but I can put more in

I know it feels nice to be paying off the mortgage earlier, but the fact is that there is no better place to put extra money in than to your pension. Every pound you put in is only costing you 51p - you are immediately doubling your money!

It's easy enough to calculate how much interest you will save on paying a mortgage off early. At 2.7% it would be around £7.5k (the lower the rate the less you save). However if you'd put the difference, grossed up (i.e. just about double), in mortgage payments in to a pension pot instead that would have gained you £32.8k from tax/NI, plus any gains on the gross amount over the 10 years. Of course you also have to factor in that for the following 5 years you can save all of your mortgage payments - but you will have missed 10 year's growth and you may be capped on pension contributions; normal savings don't give you that initial tax/NI boost.

Skibunny40

I agree that supporting children will push back my retirement date, but wonder if any others here are affected by supporting parents as well? I don't mean financially as such, but I've ended up taking a "mid-life" retirement to be around for my elderly relatives (I'm an only child and my parents were older than the norm when they had me). My plan is to return to work when the inevitable happens, but I can't plan for any set timescale and I'm limited as to how much I can put into my personal pension.

happyandcontented

Skibunny40 wrote: »

I agree that supporting children will push back my retirement date, but wonder if any others here are affected by supporting parents as well? I don't mean financially as such, but I've ended up taking a "mid-life" retirement to be around for my elderly relatives (I'm an only child and my parents were older than the norm when they had me). My plan is to return to work when the inevitable happens, but I can't plan for any set timescale and I'm limited as to how much I can put into my personal pension.

Yes, I did that too. Fortunately, it coincided with having young children at home for most of the time, so I was sandwiched between them!

It worked for us though as during that period I studied and retrained and so when I returned to work it was in a much more flexible and child-friendly hours sphere than previously.

DT2001

To cover a few points raised on this thread.
We inherited nothing to assist our early retirement plans.
I had a ‘job for life’ from which I was made redundant at 35, so did our parents think it was more difficult for us?
I believe there are more opportunities now but also more challenges however on balance I think our children are no worse off.
With longer life expectancy will more inheritances pass a generation and therefore help our children when they need it more?
Finally, pensions - my children will almost certainly benefit from my pot as I’ll utilise other savings first and they are much more aware financially than I was starting out having had ‘life’ skills taught to them at school.