The Great Pensions Crisis - Channel 5

Brilley

..if you go the annuity route, then most recent annuity quotes I have had suggest a return of just over 2% assuming you want some sort of index linking and spouse benefits, so assuming a couple with full state pensions, (ie £47.5k -£16k), that would require about £1.2m to fund the difference?...although if you went S&S on a drawdown to last 25'ish years possibly about 900k assuming your investments match inflation?...(very rough fag packet calculations)

Terron

Anonymous101 wrote: »

I've owned two houses and rented one.


Maintenance certainly does run into thousands per year. What do you think you'd spend on a house in 25 years? A new roof, windows, front door, a boiler or two, a new bathroom and kitchen, a couple of rounds of decoration, new carpets a couple of times over. That's certainly more than £25k.
How much did you lose in stamp duty when you bought it? What did you pay in legal fee's, estate agent fee's. Its not just a straightforward rent vs mortgage.


All I'm saying is in the case of elderly people which may not be able to carry out or finance maintenance I think that there's certainly an argument that selling their property at a point in time and then investing the equity whilst renting is worth considering.

Are you American? In the UK roofs generally last a lot longer than 25 years,
I currently own 9 houses. I had to spen over £7k on one last year. The tenant stopped paying and it took 6 months to get him out., There was a hole in the garage roof amongst other things.
Overall I spend about 10% of the rent on insurance, safety checks and repairs on average.

Spreadsheetman

Terron wrote: »

Are you American? In the UK roofs generally last a lot longer than 25 years,
I currently own 9 houses. I had to spen over £7k on one last year. The tenant stopped paying and it took 6 months to get him out., There was a hole in the garage roof amongst other things.
Overall I spend about 10% of the rent on insurance, safety checks and repairs on average.

As an aside, I often wonder why on earth American houses use such perishable roofing materials. Tiles/slates can last 100 years++ and aren't expensive in the first place.

nigelbb

Deleted_User wrote: »

There are several uncertainties and the answer depends on “where” and “when” but on average, renting is cheaper.

What many of the comments seem to ignore is the cost of lost opportunity, which is huge. You can buy a 1M house or, if you rent, you can invest 1M. The expected long term real return on a diversified portfolio is large and should not be ignored. It will provide the cash flow which will cover the rent several times over.
.

This is utter financial nonsense. Where does the £1million come from In the first place? Funding accommodation out of salary with a mortgage is always going to cheaper than renting over an individual’s lifetime. Pay a mortgage & after 25 years you have an asset & pay no more. After 25 years renting you have no asset but can look forward to another 25 years paying rent.

Apodemus

Spreadsheetman wrote: »

As an aside, I often wonder why on earth American houses use such perishable roofing materials. Tiles/slates can last 100 years++ and aren't expensive in the first place.

Quite agree...and then there is “siding”! I fear, though, that we are starting down that route in UK, with windows tending to be replaced every 15 years and the DG companies now pushing soffits etc as well. (My windows are 70 years old ).

atush

kev2009 wrote: »

I never saw this program, didn't know it was on. Out of interest, would you assume to half the £27k if single or not really?

Thanks

Kev

No, it is more expensive to run one residence for one person rather than 2. And that is even with full SP contributions.

atush

Apodemus wrote: »

Quite agree...and then there is “siding”! I fear, though, that we are starting down that route in UK, with windows tending to be replaced every 15 years and the DG companies now pushing soffits etc as well. (My windows are 70 years old ).

No 1, i assume you know the price of slates in the USA? More expensive.

My last US roof lasted over 20 years, just put a new one on last year. was 10K usd for a 3 bed house. My house is built termite zone) of cement block, but most houses are built of wood. But with the insulation are far warmer than Uk houses.

nigelbb

Spreadsheetman wrote: »

As an aside, I often wonder why on earth American houses use such perishable roofing materials. Tiles/slates can last 100 years++ and aren't expensive in the first place.

Our house was built in 1852 & still has the original slates laid in a rather fancy geometric pattern.

strawb_shortcake

Going back to the people that don't consider how to fund their retirement, an awful lot of people assume or expect to be left an inheritance or two which will fund their lifestyle.
I have a sibling who is a prime example of this, her and her partner came off of the housing ladder to live on a boat. She has only worked part time for a number of years so any work place pension will be minimal. Her partner lives "off grid" so I can't imagine he'd be entitled to a SP. Their own hope for a comfortable old age is inheriting from his Mum and my parents.
My brother also has made no provision other than having a flat, which I've mentioned on other threads the odds are against him being able to keep it long term.
My parents are considering equity release rather than leave it to us - I can't say I blame them!!

[Deleted User]

Brilley wrote: »

..not sure were the £1m comes from in the first place?......do you get a bank loan?

Does not matter. You have X pounds. Or borrow X pounds. The question is: buy a house with X or rent and invest X in a diversified portfolio of stocks and bonds. The latter has better long term return and less risk than a highly concentrated bet on a single property, which by the way requires upkeep.

When comparing the cost of buying vs renting the latter is cheaper when the cost of lost opportunity is accounted for. May still make sense to buy a house, but it’s spending on convenience and freedom to make changes as opposed to “wise investment”.