Bold leap into retirement

BrilliantButScary

MarlowMallard said:

QrizB said:

chuffinnora said:

My mother-in-law carried on until 80. Different generation and how they mostly looked at life-long jobs. Not very common now.

Thanks to the Triple Lock, the value of the State Pension has, for many low paid people, increased significantly since your MiL reached pension age. For someone with a relatively full NI history, there's unlikely to be any need to work beyond SPA.

For someone with a full NI history and a modest auto-enrolment pension who owns their home, I agree probably not essential to work beyond SPA. If they are still renting or paying a 35-year mortgage,  it's very different. 

Also very different, if you have children later in life, as so many do now.

Pat38493

chuffinnora said:

I know there are a number of financial experts on this thread, so I have a question.
I've been looking at 5-10 year old fixed annuity plans.

They look attractive, however when I for example look at a 5 year plan using £250k with a £100k lump sum at the end, looks like its approx about 15-20% additional over the 5 years incl £100k. If I left the £250k invested in a DC pot for the same period I guess its possible it could also earn a similar amount dependent on growth rates of course.

Am I looking at this the wrong way and missing something that needs consideration?

Not necessarily the wrong way bu 15% nominal return over 5 years is nont a lot really - even 20% is not great.  

Also keep in mind that presumably this is not inflation linked, so your payments back each year will be shrinking in real terms, including the £100K.  Therefore this doesn't really protect you against the worst case historical scenarios like the Great Depression or the 1970s where inflation was all over the place.

My working assumption is that annuities tend to pay out something not much better than the worst case scenario of what you will achieve with a well managed drawdown plan, so it depends how much you value that security.

Depends if you want certainty about it - personally I prefer the flexibility of DC withdrawal, but keep in  mind that it's not a one or the other decision - you can also use half that money to buy an annuity and half for drawdown.

barnstar2077

QrizB said:

chuffinnora said:

My mother-in-law carried on until 80. Different generation and how they mostly looked at life-long jobs. Not very common now.

Thanks to the Triple Lock, the value of the State Pension has, for many low paid people, increased significantly since your MiL reached pension age. For someone with a relatively full NI history, there's unlikely to be any need to work beyond SPA.

If they own their own home perhaps, but I know many people for whom their rent is more than the state pension alone!

I work in a warehouse with a large percentage of people in their sixties and older doing hard manual labour (it's not quite breaking rocks, but it's heavy lifting and monotonous.)  A couple have had a knee replaced, others suffer with arthritis etc.  One lady is seventy five but thankfully in reasonable health.  I can assure you they would leave if they could.  I don't know if they will be able to retire eventually, the lucky ones at the moment are only working a four day week.  Still pretty miserable for them though.

QrizB

barnstar2077 said:

QrizB said:

chuffinnora said:

My mother-in-law carried on until 80. Different generation and how they mostly looked at life-long jobs. Not very common now.

Thanks to the Triple Lock, the value of the State Pension has, for many low paid people, increased significantly since your MiL reached pension age. For someone with a relatively full NI history, there's unlikely to be any need to work beyond SPA.

If they own their own home perhaps, but I know many people for whom their rent is more than the state pension alone!

State pensioners can apply for Housing Benefit, which will pay a portion of their rent.

https://www.gov.uk/housing-benefit

chuffinnora

Pat38493 said:

Not necessarily the wrong way bu 15% nominal return over 5 years is nont a lot really - even 20% is not great.  

Also keep in mind that presumably this is not inflation linked, so your payments back each year will be shrinking in real terms, including the £100K.  Therefore this doesn't really protect you against the worst case historical scenarios like the Great Depression or the 1970s where inflation was all over the place.

My working assumption is that annuities tend to pay out something not much better than the worst case scenario of what you will achieve with a well managed drawdown plan, so it depends how much you value that security.

Depends if you want certainty about it - personally I prefer the flexibility of DC withdrawal, but keep in  mind that it's not a one or the other decision - you can also use half that money to buy an annuity and half for drawdown.

Many thanks @Pat38493   Yeah this is the conclusion I was coming to. On the face of it the fixed annuities seem to look attractive, but when you get into the figures, probably not much different if I did something similar in my DC.
Also yes I was looking at half my funds in the DC.

I kind of compare it to a DC pot that has been put into relatively safe investments by the time drawdown is starting. So I can't currently see a major benefit in buying a fixed annuity if I replicate a similar drawdown amount.

barnstar2077

QrizB said:

barnstar2077 said:

QrizB said:

chuffinnora said:

My mother-in-law carried on until 80. Different generation and how they mostly looked at life-long jobs. Not very common now.

Thanks to the Triple Lock, the value of the State Pension has, for many low paid people, increased significantly since your MiL reached pension age. For someone with a relatively full NI history, there's unlikely to be any need to work beyond SPA.

If they own their own home perhaps, but I know many people for whom their rent is more than the state pension alone!

State pensioners can apply for Housing Benefit, which will pay a portion of their rent.

https://www.gov.uk/housing-benefit

Good to hear.  I hope it is a sizable portion.

michaels

chuffinnora said:

I've read every page of this thread and its fascinating.

I can't help but wonder at the bigger picture in society. 40% of the population are over 50.

Even just in this thread alone there are quite a few people retiring or part retiring in their 50s and early 60s.

Not sure how that pan's out UK wide, and I appreciate a lot of low paid workers will be slogging their guts out to 67 and beyond.

My mother-in-law carried on until 80. Different generation and how they mostly looked at life-long jobs. Not very common now.

We are surely going to be getting deeper into a skills crisis and available workforce.

I work in IT and can already seen the writing on the wall with AI replacing a lot of traditional jobs.

The world is changing fast and even Covid has caused a lot of our generation to re-think their plans and outlook on life.

Looking across our two families, the vast majority over 50 are now retired or pleasing themselves when they work. Its only the younger ones that still have that hunger and career focus.

I'm sure some of reasons for ditching work is the increasing BS and nonsense around the workplace. Initiatives, targets, development, blah blah blah. Surely the people who come up with a lot of this are in the same boat. 

There also seems a never ending debt and doom loop for most nations finances. The workforce situation is only going to make that worse.

No wonder we all now want to enjoy the fruits of retirement.

I fear misguided government policies have transferred wealth to the older generations (increases in the money supply lead to higher asset values, led by the housing market where supply constrained below demand for an essential means that a large share of income for the younger generations has to be dedicated to housing).

However perhaps these high asset valuations are an illusion, in the end us retirees will want to convert our assets to services - food, home help, handymen, etc etc. at which point the reality of supply and demand will creep in - suppose there are 1m oldies requiring home nursing and only 500k home nurses available, the price of the home nurses will get bid up until some of the demand drops out so despite all these great big pension pots and other savings in reality the amount of home nursing can never exceed the available supply*.


* is that perhaps we will see a productivity miracle arising from AI and robotics?

QrizB

barnstar2077 said:

QrizB said:

barnstar2077 said:

If they own their own home perhaps, but I know many people for whom their rent is more than the state pension alone!

State pensioners can apply for Housing Benefit, which will pay a portion of their rent.

https://www.gov.uk/housing-benefit

Good to hear.  I hope it is a sizable portion.

If you're interested, there's a calculator here:

https://lha-direct.voa.gov.uk/search.aspx

Apologies all, I'm not trying to turn this thread into the Benefits board!

BrilliantButScary

michaels said:

chuffinnora said:

I've read every page of this thread and its fascinating.

I can't help but wonder at the bigger picture in society. 40% of the population are over 50.

Even just in this thread alone there are quite a few people retiring or part retiring in their 50s and early 60s.

Not sure how that pan's out UK wide, and I appreciate a lot of low paid workers will be slogging their guts out to 67 and beyond.

My mother-in-law carried on until 80. Different generation and how they mostly looked at life-long jobs. Not very common now.

We are surely going to be getting deeper into a skills crisis and available workforce.

I work in IT and can already seen the writing on the wall with AI replacing a lot of traditional jobs.

The world is changing fast and even Covid has caused a lot of our generation to re-think their plans and outlook on life.

Looking across our two families, the vast majority over 50 are now retired or pleasing themselves when they work. Its only the younger ones that still have that hunger and career focus.

I'm sure some of reasons for ditching work is the increasing BS and nonsense around the workplace. Initiatives, targets, development, blah blah blah. Surely the people who come up with a lot of this are in the same boat. 

There also seems a never ending debt and doom loop for most nations finances. The workforce situation is only going to make that worse.

No wonder we all now want to enjoy the fruits of retirement.

I fear misguided government policies have transferred wealth to the older generations (increases in the money supply lead to higher asset values, led by the housing market where supply constrained below demand for an essential means that a large share of income for the younger generations has to be dedicated to housing).

However perhaps these high asset valuations are an illusion, in the end us retirees will want to convert our assets to services - food, home help, handymen, etc etc. at which point the reality of supply and demand will creep in - suppose there are 1m oldies requiring home nursing and only 500k home nurses available, the price of the home nurses will get bid up until some of the demand drops out so despite all these great big pension pots and other savings in reality the amount of home nursing can never exceed the available supply*.


* is that perhaps we will see a productivity miracle arising from AI and robotics?

Just as a matter of interest, how many people on this forum would be encouraging their children to choose a career in care/nursing?

Phossy

My draughter has made that choice herself, though she wants to drive change from the government level. We wholeheartedly support her. In terms of care/ nursing as a career more generally - we see a lot of minimum wage jobs propping up Private Equity money presses that just seem to get progressively more greedy.