My DB pension: the promise, the reality, and the influence of wage suppression

SouthCoastBoy

QrizB said:

SouthCoastBoy said:

12% per annum on a 40k salary isn't much even allowing for compounding.

It's enough with 1% annual growth to give you a pot of just over £309k after 50 years, which (at 4% drawdown) would give you almost £23k pa in retirement if you include SP.

That's "comfortable" for a single person, per the Which? survey.

https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9

(2% growth would make £406k and give you another almost £4k pa.)

Not sure I would want to work for 50 years, I'm struggling after 37 years.

QrizB

SouthCoastBoy said:

QrizB said:

SouthCoastBoy said:

12% per annum on a 40k salary isn't much even allowing for compounding.

It's enough with 1% annual growth to give you a pot of just over £309k after 50 years, which (at 4% drawdown) would give you almost £23k pa in retirement if you include SP.

That's "comfortable" for a single person, per the Which? survey.

https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9

(2% growth would make £406k and give you another almost £4k pa.)

Not sure I would want to work for 50 years, I'm struggling after 37 years.

18 to 68 (SPA, give or take) is 50 years, hence my choice of calculation.

I agree that people planning to retire early should make suitable provision.

Universidad

QrizB said:

18 to 68 (SPA, give or take) is 50 years, hence my choice of calculation.

I agree that people planning to retire early should make suitable provision.

The first thing this site gave me was the tools to make effective choices about filling in the gap in my pension provision. The second thing that it gave me was a belief that early retirement could be possible, and a path to put that into practice, and by gum I am going to take it.

SouthCoastBoy

QrizB said:

SouthCoastBoy said:

QrizB said:

SouthCoastBoy said:

12% per annum on a 40k salary isn't much even allowing for compounding.

It's enough with 1% annual growth to give you a pot of just over £309k after 50 years, which (at 4% drawdown) would give you almost £23k pa in retirement if you include SP.

That's "comfortable" for a single person, per the Which? survey.

https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9

(2% growth would make £406k and give you another almost £4k pa.)

Not sure I would want to work for 50 years, I'm struggling after 37 years.

18 to 68 (SPA, give or take) is 50 years, hence my choice of calculation.

I agree that people planning to retire early should make suitable provision.

Auto enrollment doesn't get invoked until aged 22, also many go onto university so I'm not sure 50 years, starting at 18, is a realistic profile

2nd_time_buyer

Very true but I imagine for a lot of people their investment timeline is not linear:

20 years
Minimum required, don't think about it too much
35   - minimum required contributing. But realize you need to put in more but can't afford it with mortgage and kids
45 up contributions. Slightly more disposable income
50-55 pile everything in. The end is in sight.

But it's is important to put in the contributions in early to have some kind of foundation. 

Qyburn

SouthCoastBoy said:

Not sure I would want to work for 50 years, I'm struggling after 37 years.

I think this is part of the problem. I don't exclude myself, but people are living longer nowadays but want to spend less and less of that time working.

squawkbox

People should also remember that most academics join the workplace later.

Many will have done a first degree (UG), a masters, potentially an MRes, a PhD and in some fields, multiple post-Docs. 50 years after that is taking people near 80 years old.

MattMattMattUK

squawkbox said:

People should also remember that most academics join the workplace later.

Many will have done a first degree (UG), a masters, potentially an MRes, a PhD and in some fields, multiple post-Docs. 50 years after that is taking people near 80 years old.

I know several people who lecture in Universities in their eighties, although admittedly they do it part time now but one was full time up until their late seventies, equally I do not see why I could not do my job, or something similar until potentially a point when my mental faculties fail which I hope would be well after eighty. The flip side of that is that people in manual jobs are rarely able to keep going in their sixties, let alone seventies or eighties and most are going to be struggling in their fifties, if not earlier. 

Qyburn said:

SouthCoastBoy said:

Not sure I would want to work for 50 years, I'm struggling after 37 years.

I think this is part of the problem. I don't exclude myself, but people are living longer nowadays but want to spend less and less of that time working.

People used to retire, then die after 2-5 years, the pension did not cost the taxpayer much, now people live around 15-20 years. People used to work from 16-65, 49 years, to claim a pension for 5 years, so 9.8 years of work for every year of pension. Now on average people work 47 years to claim a pension for 14 years, so only 3.3 years of work for every year of pension. Those ratios are also expected to get worse, under three years of work per year of pension by the end of the decade. The state pension in it's current form is unsustainable, but then so is our entire economy, everyone pays too little tax, but especially the bottom two thirds, the tax free personal allowance needs to go, it is the largest of any major European economy and makes no economic sense, we also need to start phasing out in work benefits, having a system to support people to work less than full time makes no sense. 

2nd_time_buyer

My experience of people working into the 70s and 80s at University is they do it because they want to rather than they need to.

It is a strange juxtaposition for an academic. Within their field they can be very well known, respected, and by definition they are an expert. They are doing a mentally stimulating job around interesting people. On retirement they can lose a large chunk of their identity. We have academics still coming in full time despite being retired and not being paid 

MattMattMattUK

2nd_time_buyer said:

My experience of people working into the 70s and 80s at University is they do it because they want to rather than they need to.

It is a strange juxtaposition for an academic. Within their field they can be very well known, respected, and by definition they are an expert. They are doing a mentally stimulating job around interesting people. On retirement they can lose a large chunk of their identity. We have academics still coming in full time despite being retired and not been paid 

I also think that many people recognise that most people deteriorate fairly quickly if they stop using their mental abilities because of no longer working and do not stimulate themselves in other equally demanding ways. The majority of the over 70s I know all do something that stimulates them, some lecture, some volunteer, some mentor, some help out in schools etc. to help keep themselves busy, I know four people who did degrees in their seventies and one of them went on to do a masters and is now doing a PhD.

All the research that keeping mentally and physically active is the best way to stave off many of the effects of aging and that mental capacity can drop significantly and fairly quickly for those who stop using their minds on a regular basis. 

I do agree with the identity side of things, I think that is true of a lot of people, not just those in academia though, anyone who has had a career tends to struggle with a partial loss of identity and routine when leaving work.