Martin Lewis Money Show - Pensions (ITV, 18/02/2021)

nigelbb

colsten said:

nigelbb said:

epm-84 said:

I've never got his suggestion about the amount you put into a pension relating to your age to get 2/3 of your 'normal salary' when you retire.

2/3 of what exactly?  No-one's salary is going to stay at a constant level, increasing with inflation each year.  It might be aged 60 you earn triple what you earned aged 25, even before inflation.  It might be if you work in the constructive industry you decide to move to less manual work when you're in your 50s and earn less aged 60 than you earned aged 30.  If it's 2/3 of the average over your working live then it might take into account a time when you had dependent children and a mortgage so needed a lot more than you will need in retirement.

Some people rent housing their entire lives so obviously they will still need to pay rent after retirement. Those who buy their homes are very likely to be mortgage free by the time they retire & also have the option of downsizing. For many (?most) home owners their house is part of the provision for retirement. 

A house doesn't come entirely free of charge once you have paid off the mortgage. There are still maintenance costs and insurances to pay.

Rent or mortgage is typically 25-50% of net income. Maintenance & insurance costs will be only a fraction of that.

Malthusian

dunstonh said:

 Indeed, it cannot be accurate as it was based on annuity rates of the late 80s/early 90s which are very different to drawdown rates used today.  Plus, life expectancy is different as well.

But the UBI element of the State Pension is higher so it isn't all bad.

I ran some numbers a while ago, and the "take half your age" rule of thumb still stands up reasonably well, provided you aren't a high earner (in which case you need to take more responsibility) or you aren't above 40 (and if you've managed to get to 40 without saving a penny in pensions or other assets you really do need to take drastic action).

It is however incorrect to say that if you are targeting an income of 2/3rds your working income you should follow the "take half your age" rule. That's conflating two different rules of thumb (the second being "you need 2/3rds your working income in retirement"). You can usually get away with using one a rule of thumb but not one on top of another. You multiply the errors and it breaks down far too quickly in reality.

AlanP_2

You can usually get away with using one a rule of thumb but not one on top of another.

One in each hand maybe?

Good job they aren't called "Rule of Finger" otherwise we could have 8 at once 

dunstonh

You can usually get away with using one a rule of thumb but not one on top of another. 

Multiple thumbs.....  Thats what comes with being in Norfolk!

gingerdad

jem16 said:

epm-84 said:

jem16 said:

I watched his programme last night even though I never watch it at all. Of course all the Waspi/BT60 mob have been harassing Martin all week even though it was never likely to be about the state pension. That argument is currently raging on his FB page after someone dared to criticise Martin. What I find more interesting there is the amount of people not backing them and calling out their myths.

It's a controversial issue.  On one hand a woman should not be entitled to more state pension than a man (if they both born on the same date, die on the same date and have both paid the same level of NI contributions.)  On the other hand the government didn't give them all that much notice of the change.  

I’m one of the 50s’ born women. The announcement about SPA rising came in 1993 when I was 37 years old. It gave me 23 years’ notice that my SPA would no longer be 60 but 65. Even the 2nd increase to 66 in 2011 gave me just under 10 years’ notice. The ones I feel for are those born late 53 and most of 54 who had only around 6 years’ notice of an extra 18 months increase. 

The problem with WASPI/BT60 was not a lack of notice by the Government but a lack of paying attention and being responsible for their own retirement. Unfortunately their campaigns are based on a lack of knowledge and a lot of misinformation being peddled by their so-called leaders. 

But doesn't that sum up most "scandals" I was 20 in 1993 and aware it was coming and discussed with my mum who it might have affected? So many people don't keep up with what's going on them blame everyone for not seeing.