Pensions? Are they even worth it?

Albermarle

ajfielden said:

Thrugelmir said:

Allumis said:

I have what I would consider a very good salary 

Then you need to sit down and analyse where the money goes. We all have choices as to whether to spend or save. My Grandmother was forever telling me that from acorns grow oak trees. Small things matter the most. 

Judging by lack of response, I think the OP has concluded that we're all talking crap and there's some miraculous ingredient required that we don't know about. Magic beans?

Have you not heard of the 'Magic Beans ETF ' ?

LV_426

Thrugelmir said:

ajfielden said:

Thrugelmir said:

Allumis said:

I have what I would consider a very good salary 

Then you need to sit down and analyse where the money goes. We all have choices as to whether to spend or save. My Grandmother was forever telling me that from acorns grow oak trees. Small things matter the most. 

Judging by lack of response, I think the OP has concluded that we're all talking crap and there's some miraculous ingredient required that we don't know about. Magic beans?

Basic numeracy skills are pretty shocking these days. One can only assume that basic finance skills are getting even worse. What used to be past down from generation to generation is being lost. Little hope for the next generation. 

Oh well, never mind he'll realise in about 30 years his mistake.
I'm going to sound like a grumpy old git here, but my experience is that young people these days generally don't want to save. They want everything NOW, and are prepared to take on debts up to their eyeballs.
There's one guy at work just graduated, rolled up one day in a big Jag. God knows what the payments on that were! Mortgage, student loan to pay off. I doubt very much if he was contributing to the company pension scheme.

LV_426

Albermarle said:

ajfielden said:

Thrugelmir said:

Allumis said:

I have what I would consider a very good salary 

Then you need to sit down and analyse where the money goes. We all have choices as to whether to spend or save. My Grandmother was forever telling me that from acorns grow oak trees. Small things matter the most. 

Judging by lack of response, I think the OP has concluded that we're all talking crap and there's some miraculous ingredient required that we don't know about. Magic beans?

Have you not heard of the 'Magic Beans ETF ' ?

  
Hm no. Sky's the limit on that one then?

Malthusian

mlv-1967 said:

This is the system in the UK.  Most other developed nations have a much more generous state pension system - even the USA has a 'social security' pension that you can claim from age 62 which is paid TAX FREE if you have no other income.

"More generous" is debatable. State pensions in other countries are higher because they are earnings-linked. Other countries think it fine that if you pay more in you get more out. In the UK we no longer believe that rich people should get more taxpayers' money than poorer people. (Not when it comes to State Pension, anyway.)

If the basic rate of income tax was 53% as you would like (rather than 44% as currently, taking into account next year's increase) there would be no noticeable difference to State Pension provision and people would have a lot less money available to save for retirement.

The UK state pension is also tax free if you have no other income due to the personal allowance.

LV_426

Malthusian said:

The UK state pension is also tax free if you have no other income due to the personal allowance.

And I'd say £9339.20/year is barely adequate, and most people might to struggle to live on it.

cloud_dog

ajfielden said:

Malthusian said:

The UK state pension is also tax free if you have no other income due to the personal allowance.

And I'd say £9339.20/year is barely adequate, and most people might to struggle to live on it.

Yes, that is why there are all these tax incentives and more recently regulations to ensure people set money aside for their retirement.  It's not like it is all kept a secret in a dark room, even a 21 year old knows what the current state pension is, can relate that to their own earnings and figure it out.

QrizB

ajfielden said:

Thrugelmir said:

Allumis said:

I have what I would consider a very good salary 

Then you need to sit down and analyse where the money goes. We all have choices as to whether to spend or save. My Grandmother was forever telling me that from acorns grow oak trees. Small things matter the most. 

Judging by lack of response, I think the OP has concluded that we're all talking crap and there's some miraculous ingredient required that we don't know about. Magic beans?

I've had a quick look at OP's previous posts. In 2016 they were around 30 and just starting a job on £21k, with a view to progressing towards £30k or so.

So I would guess they're currently mid-30s and earning £35-£40k.

@Allumis if you're still reading this thread, the very crude guide is that you should be saving half your starting age in % towards your pension. If you're currently mid-30s, that's 17-18%. If your employer will put in 4%, you need to add 14%. That's a total of around £7k per year.

Also your goal of retiring at 55 is going to take some serious work on your part. Most people of your age won't be aiming to retire until 68 or later.

• £7k per year for 20 years (to 55) with 4% annual growth will give you a pot worth £208k, which might give you an annual pension of £6-8k pa
  
• £7k per year for 33 years (to 68) under the same conditions will give a pot of £463k, and a pension of £14-18k pa.
  

[Deleted User]

mlv-1967 said:

Silvertabby said:

The idea has always been that your State pension will cover the very basics, with the rest being paid for by savings/ other pensions.

This is the system in the UK.  Most other developed nations have a much more generous state pension system - even the USA has a 'social security' pension that you can claim from age 62 which is paid TAX FREE if you have no other income.

US has a very generous state pension system but it starts from age 66; will switch to 67 shortly. 

I can also speak for Canada. Canada has a less generous state pension compared to the UK.  

We have a 53% marginal tax rate in major provinces.  The lowest 15% tax band starts from zero for working people. The same applies to retirees but they can claim just over 1000 pounds tax credit, so very low incomes are “tax free”. 

The amounts Canadians can contribute to pensions and “ISAs” are much lower too.  And non-registered investments are subject to higher taxes.  No 25% tax free lump sum.  

On the positive side,  salaries are, on average, higher and there is no life time limit on pensions.  

I think you are underestimating the benefits of UK pensions. 

Dazza1902

Unfortunately the Op is heading for cardboard alley in retirement. Makes me wonder if it's a wind up.
 Not sure all young people are the same, daughter happily joined a career average pension scheme at 23. I pointed out if she wanted to retire early it would be reduced so she opened up a small sipp aswell. 
 She is living at home rent free though🙄
 

Albermarle

In the UK we no longer believe that rich people should get more taxpayers' money than poorer people. (Not when it comes to State Pension, anyway.)

As long as you discount , higher rate tax relief , ISA allowances etc , none of which are of any benefit to a significant part of UK society .