Can you imagine the destruction in the UK if the property market crashed

Herzlos

I was looking at:
https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p
Which is saying for a £27k pension you need £298k (annuity) or £215k (drawdown)


And this:
https://www.telegraph.co.uk/financial-services/investments/pension-advice/what-is-a-good-pension-pot/


Which as you said is saying you need £260k to get a £9k pension (+£8.5k state pension). That'd result in a pretty modest living but is likely to be quite typical of those who are currently around 40.


No way could you be comfortable in many parts of the country on £15k a year whilst paying rent.

Malthusian

lisyloo wrote: »

You've included max state pension.
Thats not the case for everyone.

There's no reason anyone who spends most of their working life in the UK should not have a full NI record (using Class 3s if necessary). People who move to the UK may have sources of income from their motherland.

Plus 4% is on the high side.

No, it's on the low side. Drawing more than 4% a year without exhausting the fund is perfectly possible if you sensibly manage it, keeping a large cash buffer and reducing withdrawals during a market crash, or at least not increasing them.

The 4% rule assumes you increase your income by inflation each year and take no notice of markets, which is a poor drawdown strategy. It is not meant to be a drawdown strategy at all; it is a rule of thumb for the accumulation stage as to whether you have enough money in your pension pot.

Most people discussing this (on the pension forums) are also looking to retire way before SPA, so for example 55 instead of 67.

As my post acknowledged.

I would still maintain that having rent free living is a very good element to comfortable retirement provision.

No argument there.

It's still difficult/very difficult for most people without generous employment scehems to attain.

It's difficult for anyone to achieve a lifestyle where you get £33,000 gross a year in retirement. It isn't however difficult to achieve a comfortable retirement by most people's understanding of the term. Most people aren't expecting £33,000 gross a year in retirement as they don't earn that much in working life.

Malthusian

Herzlos wrote: »

I've seen a few articles posting about £260k being what's needed for a modest income of about £25k (but that assumes state pension which isn't going to exist in 20 years).

A possibility, but only because it will have been expanded and called Universal Basic Income instead.

State Pension is not going to be abolished unless the economy permanently crashes by over 50% and the UK enters a Dark Age, and that's an apocalypse scenario which will render all retirement plans meaningless whether they involve State Pension or not.

In the absence of an economic collapse there is absolutely no reason the Government would abolish State Pension and millions not to. People bang on about it being unaffordable which is nonsense. What it actually is is expensive, which is no problem in a rich country.

If that's for two people then that's £17k State Pensions and a 3% withdrawal rate so that's very conservative. (It's possible that this is an old article using a lower rate of State Pension.)

lisyloo wrote: »

It would be interesting to see what assumptions there are in that calc but safe withdrawal rates are discussed a lot on the pensions forums and Max is considered to be 4% and thats including from IFAs.

IFAs have to be cautious about what they say in the context of Internet forum man-down-the-pub guidance.

If an IFA's client says they want to draw £5,000 a year from their £100,000 drawdown fund, markets are buoyant, and they have a large reserve in cash which means they can stop their £5,000 a year for a while without any financial hardship, then very few IFAs are going to tell them they're doomed. But that's in the context of a one-to-one discussion with full knowledge of the client's circumstances and ongoing reviews.

lisyloo

Herzlos wrote: »

I was looking at:
https://www.which.co.uk/money/pensions-and-retirement/starting-to-plan-your-retirement/how-much-will-you-need-to-retire-atu0z9k0lw3p
Which is saying for a £27k pension you need £298k (annuity) or £215k (drawdown)

About half of that is made of state pension for 2 people.
So an SwR of 3.15% which makes much more sense.
That means most people (under 60 now) can’t retire before 67.
A lot of people aren’t happy with that (my parents both had significant health issues at 65), plus many on here say state pension may not even be available. I wouldn’t go that far but it’s a risk depending on it for half your income.

As 20% of men die before retirement that means at least 20% of women won’t have that second State pension to rely on.
I don’t think the % of women that die is so high, but some do also die before retirement, so relying on 2 state pensions in the calculation is not correct.

I am a little surprised at which.

I have no issues with state pension ages rises per se (mine has gone from 60 to 67) but I think there’s going to be quite a lot of early medical retirements particular towards the upper end of that age group.

Filo25

I have to admit, there is no way I will be considering retirement until the morgage is paid off, after that I can hopefully start to feel a lot more relaxed about the numbers, unfortunately that is a long way away!

lisyloo

Filo25 wrote: »

I have to admit, there is no way I will be considering retirement until the morgage is paid off, after that I can hopefully start to feel a lot more relaxed about the numbers, unfortunately that is a long way away!

I think it’s also a good idea to have your house in order
E.g. pay for any major works you want such as new kitchen before you retire.

It depends on your budget obviously but for most people it’s going to be easier to spend on discretionary items whilst still earning.

I’m also thinking of having a bucket list holiday but that is also because of health reasons (we do scuba diving which requires physical fitness and may not be possible when elderly).

But yes, mortgage is the “biggee” expensive to not have in retirement.

qwert_yuiop

lisyloo wrote: »

Why does gambling on sterling in a currency crisis not make sense to you?
This is what investors do, buy cheap.
Many property investors in London prefer to keep their properties empty although it is of course up to them.

The gamble is that the British economy will recover. If it’s permanently damaged (or at least for a few decades), it’s a losing proposition. The deal is only cheap if the pound or the property, or both, recover, and soon.

lisyloo

qwert_yuiop wrote: »

The gamble is that the British economy will recover. If it’s permanently damaged (or at least for a few decades), it’s a losing proposition. The deal is only cheap if the pound or the property, or both, recover, and soon.

You’re right, it’s a gamble.
But they are investing. Some places in London are exclusively marketed at the Chinese/Malaysians.
Don’t forget there are clever active marketing forces at work here, so you could consider it akin to endowments, timeshares etc.
Just because it might not work doesn’t mean people won’t be encouraged to invest.

Personally I don’t believe we are doomed forever.

Malthusian

qwert_yuiop wrote: »

The gamble is that the British economy will recover. If it’s permanently damaged (or at least for a few decades), it’s a losing proposition. The deal is only cheap if the pound or the property, or both, recover, and soon.

We're talking about investment in property, not the FTSE 250. People need somewhere to live even in a depression. Yes rents might go down if people are really stretched, but if the price you've paid for the property has also gone down, due to a slump in both the currency and the property market, that makes up for it.

This is a big "might" as rents are highly recession-resistant. When you are completely skint and have the choice between paying your rent or buying food, you pay your rent and go to a food bank. There are no house banks, except under bridges.

Meanwhile you have plenty of upside when the economy recovers, which it will, one way or another.

It's not a risk-free bet - nothing is - but it's a perfectly logical one.

Alternatively if you really wanted to make big bucks in a UK Great Depression, you could re-run the Detroit property scam on Asian investors. (I.e. buy distressed properties in Stoke for £10,000 or less and flog them to suckers for £50,000.)

qwert_yuiop

lisyloo wrote: »

You’re right, it’s a gamble.
But they are investing. Some places in London are exclusively marketed at the Chinese/Malaysians.
Don’t forget there are clever active marketing forces at work here, so you could consider it akin to endowments, timeshares etc.
Just because it might not work doesn’t mean people won’t be encouraged to invest.

Personally I don’t believe we are doomed forever.

Their gamble may of course be based on the belief that brexit may never happen.
Or they’re being royally ripped off by persuasive salesmen. I once met a bloke whod bought two apartments off plan in a new resort on one of the Cape Verde islands. The scheme failed and he lost all his investment. Turned out the island had no airport. Not every investor is clever.