Mind the 'age' gap: retirement planning
Comments
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Cottage_Economy wrote: »Say there were checks and balances in place, I wonder how many people would take it early?
There must be people out there still working up to 67 because their occupational pensions aren't enough to live on.
I've no doubt there are lot, given what the pensions industry tells us is the "average" pension pot, and that's for those who actually have one!
IIRC a recent FCA survey reckons 30% don't, though I don't think that was broken down into age bands - another survey suggested that 12% of people retiring this year have no private pension at all, and will rely solely on the state pension.0 -
The cynic in me thinks auto-enrolment is a means for future governments to reduce pensioner benefits, the pittance pushing future pensioners over the income level to get them, not addressing the issue of making people save a decent amount to make a real difference to their retirement.
I think it's perfectly sensible to get people to make actual provision throughout their working lives to pay for their own retirement.
The alternative, that i see depressingly often even amongst otherwise sensible people, is that of classic moral hazard. "I don't want to save for retirement and then get reduced benefits: I'd rather spend it now because the government won't let me starve when I retire".
Any legitimate means of encouraging the former and discouraging the latter is fair game to me, not a cynical approach.0 -
ex-pat_scot wrote: »I think it's perfectly sensible to get people to make actual provision throughout their working lives to pay for their own retirement.
The alternative, that i see depressingly often even amongst otherwise sensible people, is that of classic moral hazard. "I don't want to save for retirement and then get reduced benefits: I'd rather spend it now because the government won't let me starve when I retire".
Any legitimate means of encouraging the former and discouraging the latter is fair game to me, not a cynical approach.
I agree.
I have family members that have said to me that they have struggled all their lives to put a small amount of money away with which they top up their state pension to provide a barely (their words) acceptable standard of living and yet they have friends that either didn't bother or couldn't do that and are now topped up by benefits to the levels of someone who has.
They have actually said to me that they wish they hadn't bothered and to a point I can understand that outlook.
I've discussed my approach to retirement saving with them and their thoughts on that were that if you can afford to save heavily into a pension then that's great. You ought to, and those that do will be rewarded with a fruitful retirement. However if you're not able to save heavily, there's no point saving at all.
Its a sorry state of affairs and I suspect most people think like this. As other have said we on here are very much in the minority.0 -
Cottage_Economy wrote: »Not sure what will happen to my niece as she has gone into education and intends to live and work among the poorest communities in the Southern hemisphere. So she's already saddled with student debt and little chance of starting a pension for a long time to come.
As you describe it it's unlikely she'll pay a penny of the debt back, partly because her income will be too low and partly because she's leaving the country. So she's not saddled with anything.
If she leaves the country she won't be eligible for tax relief, so putting money into a pension for her is likely to be an unnecessarily complicated and tax-inefficient exercise. Personally I would keep the money and mentally earmark it for her (them). Provided it won't affect your retirement plans. A bare trust is not appropriate as you don't want her to have the money now, and other types of trust are expensive and tax inefficient.I am seriously considering starting small pension funds for both of them and putting some money aside. Nephew won't ever need it, but I can't just do it for her as that would be unfair on him.
This was discussed extensively during the WASPI nonsense. Everyone would draw it as soon as they would get it. Then they would complain that it wasn't enough to live on. And they would be right, as the State Pension is designed to be just enough to live on, so State Pension minus an early retirement penalty is not enough to live on. Then the Government would have to top them up with Pension Credit or other means-tested State Benefits.Just throwing this out there as it sprang to mind - why can't we have the state pension operate in a similar way to a normal pension as to when you take it?
So effectively, introducing the option to take it early is to reduce the State Pension Age, which we can't afford and is the opposite of what the Government has been trying to achieve for the last two and a half decades.0 -
IIRC a recent FCA survey reckons 30% don't, though I don't think that was broken down into age bands - another survey suggested that 12% of people retiring this year have no private pension at all, and will rely solely on the state pension.
12% is close to the proportion of the workforce that are on the minimum wage. Someone who lives on the minimum wage is unlikely to need private pension provision as their State Pension(s) and other benefits (e.g. Housing Benefit) are likely to be adequate.0 -
Malthusian wrote: »As you describe it it's unlikely she'll pay a penny of the debt back, partly because her income will be too low and partly because she's leaving the country. So she's not saddled with anything.
I don't think it will be a permanent move, maybe a couple of years. I can't see her getting on in South America, given her liking for immaculate hair and make-up. Mind you, it might be the making of her if it helps her understand how privileged she is and the difference between wants and needs. She's qualified to teach english and spanish so I suspect she will come back here and perhaps go down the teaching route, so she may end up with a half-decent pension one day.Malthusian wrote: »If she leaves the country she won't be eligible for tax relief, so putting money into a pension for her is likely to be an unnecessarily complicated and tax-inefficient exercise. Personally I would keep the money and mentally earmark it for her (them). Provided it won't affect your retirement plans. A bare trust is not appropriate as you don't want her to have the money now, and other types of trust are expensive and tax inefficient.
You're quite right. I can always step in at a later date and help out if we can afford to, or maybe leave her something in our wills.0 -
Cottage_Economy wrote: »I know we won't be able to support him. Every penny we have will need to be accounted for and working hard if I'm to go at 55 and stay gone.
He will see you retire at 55 and say 'oh he must be rich then'.0 -
Cottage_Economy wrote: »We don't even talk about it with friends anymore.
Years ago I said to friends "I can't imagine anyone intelligent not clearing their credit card balance every month." I got The Look. From which I got the message.Free the dunston one next time too.0 -
Anonymous101 wrote: »However if you're not able to save heavily, there's no point saving at all.
That's an inevitable consequence of the reforms to the welfare state introduced by the postwar government. The great reformer William Beveridge had warned against introducing pernicious incentives but I suppose the Labour government of the day knew how to arrange things to buy votes.Free the dunston one next time too.0 -
He will see you retire at 55 and say 'oh he must be rich then'.
Hmmmm. Guess I will have to be the bad guy if and when the time comes - whatever money we have has to last a possible 40 years. If he needs money in retirement he will have to go through the benefits system or get a job.Years ago I said to friends "I can't imagine anyone intelligent not clearing their credit card balance every month." I got The Look. From which I got the message.
I've had that look. We are debt free apart from the mortgage but if anyone moans about debt etc., we make 'yes, isn't it awful' noises in agreement. Buying the smallholding let the cat out of the bag somewhat with regard to our finances but we tell people that this area of the UK is dirt cheap and we got a great deal because the OAP owners were ill and needed to move quickly.
Not strictly true but not a complete lie either.0
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