The Great Pensions Crisis - Channel 5

[Deleted User]

If one is in his 80s living on a state pension only, then owning a house isn’t all that great financially.

A nursing home can’t be off the cards; meanwhile the home is deteriorating because proper upkeep requires labour and maintenance costs. That hurts value as well as living conditions.

The house could be sold before it deteriorates and loses value and the money could be used to buy an annuity. The rates are good for older people so no need for a housing benefit.

I take your point on the fear of the landlord kicking you out but it’s a) unlikely and b) find a new rental. Do understand that’s not how most people think; that’s why they struggle with low cash flow.

savingpennies

Malthusian wrote: »

How much is your daughter paying into her pension?

The conversation here has taken a slightly different turn but to get back to, what I think was the aim of the programme, to think more about your future retirement and pension planning. Since watching the programme, my 25 year old daughter has arranged to increase her own contribution and after a discussion with her employer (boyfriend), he has agreed to match it. He's also going to increase the contribution for his other employee (her sister). :T

Paul_Herring

badmemory wrote: »

The only reason to rent if you can afford to buy is if you are fairly sure you are going to change job in the near future to a place that you would find it difficult to commute to.

It really isn't.

Triumph13

badmemory wrote: »

The only reason to rent if you can afford to buy is if you are fairly sure you are going to change job in the near future to a place that you would find it difficult to commute to.

The reason to rent is if you value the flexibility to move more than the security of knowing you can stay put. I bought too early which made it impractical for me to take up opportunities to work overseas that I would otherwise have very seriously considered (house was a doer-upper and so not easily rentable). I won't be advising my kids to buy too early unless they get something they could keep on as a profitable rental.
For anyone who expects to move multiple times over the course of their life the costs involved with buying and selling houses are significant. It can still make sense if you are improving the properties along the way, but renting whilst building up other assets can make a lot more sense - spend on rent what you'd spend on interest, invest what you'd spend on capital repayments.
I would agree that most people will eventually get to a point where they don't want to move any more and have security. The investments can then be used to buy a property rather than the income they produce paying rent.
The important thing is to make sure that you take your decision based on a sensible assessment of what your future holds and the relative costs of renting and owning now.

jimi_man

nigelbb wrote: »

Dressing up playing the stock market as "investment" when it's just posh gambling is what is nonsense.

So what you are saying is that investing in DC pensions, which are based on the stock market, is just posh gambling?

nigelbb

jimi_man wrote: »

So what you are saying is that investing in DC pensions, which are based on the stock market, is just posh gambling?

Of course it doesn't matter how you dress it up it's not risk free. The value of an "investment" and the income received from an "investment" can go down as well as. Just up ask those who "invested" in Neil Woodford's funds.

[Deleted User]

nigelbb wrote: »

Of course it doesn't matter how you dress it up it's not risk free. The value of an "investment" and the income received from an "investment" can go down as well as. Just up ask those who "invested" in Neil Woodford's funds.

Not sure why you would use scary quotation marks. Yes, all investments have risks. Nothing is risk free. The only way to avoid risk altogether is to die right now. So?

Gambling is an attempt to get financial gratification right away, putting all eggs on a bet. Investments involve risk management, diversification and the longer the time horizon the lower the risk while the reward is higher.

DT2001

Mordko does make a few very good points before lighting the blue touch paper.
In post 80 I think he is spot on with his assessment that we are much better able to deal with risk taking early in our lives as we have time to recover from set backs. I’ve seen my investments fall in the housing correction in the late 80’s and the dot com bubble but stayed invested long enough to benefit long term. A friend of mine is only now sitting on a paper profit from housing after 25 years so I agree that luck does play a part.
I like the idea of the Rule of 90. My mother downsized about 5 years ago and released equity which is being used slowly to provide some care at her new home. As she has just turned 90 she doesn’t meet your criteria however the diversification away from illiquid assets is a big benefit. So if you can tweak the rule to allow for our inbuilt desire to own our own home (maybe peace of mind factor?) it might be more acceptable.

badmemory

The big problem with renting of course is that after a very few years the rent has increased to more than the mortgage would have been. How much can you save when your rent is crippling you? When I was told how much rent I would get for my house I burst out laughing & said that they were yanking my chain. It was three quarters of what my income would now be if I was still working.

nigelbb

Deleted_User wrote: »

Not sure why you would use scary quotation marks. Yes, all investments have risks. Nothing is risk free. The only way to avoid risk altogether is to die right now. So?

Gambling is an attempt to get financial gratification right away, putting all eggs on a bet. Investments involve risk management, diversification and the longer the time horizon the lower the risk while the reward is higher.

Substitute "bet" for "investment". Studying the form book is no guarantee of success. There are people who make a living from betting on horses just as there are the who make a living from betting on stocks & shares & currencies etc