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Highway1
18th Mar 2018, 14:03
This is from the Guardian so it must be true.... :eek:

One generation ago, 8 million workers had defined benefits pensions (http://uk.businessinsider.com/defined-benefit-pension-transfer-wealth-from-workers-to-companies-2016-8). When they retired, this older generation could be sure what their pension would be (https://www.moneyadviceservice.org.uk/en/articles/defined-benefit-schemes). Today, the number of people with defined benefits pensions has dwindled to one-fifth of what it was. Now, 5.6 million employees have a defined contribution pension. This younger generation of workers know what they have to put in, but they don’t know what they will get out when they eventually retire.

How did such a radical shift take place? According to the Wharton School’s J Adam Cobb, from the 1980s onwards, companies with impatient owners who only cared about short-term financial returns would cut back workers’ pensions to increase profits (https://pubsonline.informs.org/doi/abs/10.1287/orsc.2015.1001). As unions were undermined, bosses faced less opposition and were able to push through more insecure pensions. Now the public sector is under pressure to follow the lead of “best practice” in the corporate sector and push workers on to defined contribution pensions (https://www.telegraph.co.uk/pensions-retirement/financial-planning/pensions-apartheid-how-public-and-private-systems-compare/).

Defined contributions pension were made legally possible in the UK by Margaret Thatcher’s government in 1986. Workers were told these new kinds of pensions would give them more individual choice. But individuals proved to be much less economically rational than Thatcher assumed. When given control over their pensions, people tended to make naive financial decisions (https://www.aeaweb.org/articles?id=10.1257/aer.91.1.79) based on rules of thumb, which led to smaller pension pots. Workers on defined contributions pensions also found themselves at the mercy of the market.

As young people consider their future, many have come to the conclusion that they are never going to be able to retire (https://www.theguardian.com/membership/2017/jan/23/saving-retirement-pension-generation-old-age). A world in which you never stop toiling might appeal to a few workaholics, but is likely to have some disastrous consequences for the rest of us.

This leaves today’s young people with four options. The first is exit. Many skilled young people have realised that things are getting worse in the British workplace, and have decided to head for more attractive places such as Australia – which also happens to have one of the world’s best pensions systems.

So head to Australia where the superannuation pension scheme is a defined contribution pension....


The scary thing is that the author is a professor at the Cass Business School at City, University of London..:uhoh:

https://www.theguardian.com/commentisfree/2018/mar/16/death-retirement-striking-lecturers-pensions

Gertrude the Wombat
18th Mar 2018, 14:34
I don't consider myself "young" but I have reached the conclusion that I am "never going to be able to retire".

Once Upon A Time one might have expected a 2/3 final salary pension, right? Say (picking round numbers here) £65k for a couple on modest professional salaries of £50k each?

With "defined contributions" you need savings that will return you £65k/year and keep their value against inflation (so that you can eat next year as well as this year). Ignoring inflation, if you can get 2% these days without going to a dodgy foreign bank you've never heard of that's £3.25m you need ... and you'll need lots more than that to inflation proof your income.

Or you could buy houses. Round here a £350k house returns around £15k rent, better round that down to £10k to cover expenses, bad tenants, repairs, vacancies etc. That looks better, as you'll only need around 7 houses, costing only £2.45m to buy, and with a bit of luck that gives you inflation proofing. It's lots more hassle of course, which you might not want to be doing yourself on a day-to-day basis when you reach your nineties ... but then you can, at a cost, use agencies, if you can actually find one that actually reduces hassle rather than increasing it. So let's make that eight houses at £2.8m.

Some people here may well have £3m for houses or £5m - £10m for the cash/interest route in their private defined contribution pensions. I don't.

Highway1
18th Mar 2018, 14:52
I think you are being too pessimistic there. If you take 3% as the safe withdrawal rate (used to be 4%) then for an income of £60k you need £2 million invested.

http://corporate.morningstar.com/us/documents/targetmaturity/LowBondYieldsWithdrawalRates.pdf

VP959
18th Mar 2018, 14:54
TBH, I never know how anyone can predict what is going to happen in 20 to 40 years time, so the lottery of any defined benefit pension seems just that, a lottery.

I was exceptionally lucky, in having a final salary scheme that provided me with a pension that was essentially 1/80th of my final salary for every year worked, up to a maximum of 40 years service, with no additional pension earned for more than 40 years service. It was notionally non-contributory, but for a lot of my working life my pay was determined by comparison, and 12% was taken off to account for the perceived value of the non-contributory scheme, so in reality I earned 12% less in order to benefit from the pension scheme. That makes it a contributory scheme in essence, as far as I'm concerned, but nevertheless I'm not complaining about it.

The major problem with this scheme is that the 12% salary reduction should have been put into a pension fund, but it wasn't. In my view that was grossly irresponsible, but it's pretty typical of the short term thinking in government - no government plans beyond the next election; one of the major flaws in our democratic system, IMHO.

By some odd quirk, that I still don't fully understand, I retired early, after 37 years service, yet was given a pension that was 41/80ths of my final salary, plus a tax-free lump sum. I don't consider myself particularly dim, but even after reading and re-reading all the information I was given I couldn't see how they had worked this out, so called them for confirmation, and was assured that it was correct.

Although I'm very lucky, I can't help but feel that my generation has created an enormous problem for generations to come. What we should have done is established robust, easy to understand, mandatory pension schemes, so that everyone in employment knew how much they were contributing and, most importantly, how much they could expect to receive on retirement.

I've seen the devastating impact of a pension scheme collapse; a friend worked for the Mirror group of newspapers and retired at 65 with virtually no pension at all in the mid-1990s. He managed to find some odd jobs, got a PSV licence so he could work for the local bus company, did gardening and decorating work for people, but he knew that he'd have to carry on working until he died, as he couldn't survive on the state pension as it was at that time. He was still working when stomach cancer killed him quite quickly, before the age of 70.

How hard can it be to mandate a sensible, simple and fair pension scheme, that cannot be fiddled by employers or the government, one that ensures that everyone can expect to have a reasonable retirement, free from worries about how they are going to pay the next bill?

Gertrude the Wombat
18th Mar 2018, 14:59
I think you are being too pessimistic there. If you take 3% as the safe withdrawal rate (used to be 4%) then for an income of £60k you need £2 million invested.
Interesting, thanks. So, with some more sophisticated sums and research, and taking only slightly more risk than the housing approach, I'd only need £2m rather than £3m.

But guess what: we don't have £2m either.

aterpster
18th Mar 2018, 15:05
Defined benefit plans for public employees will likely bankrupt California.

Highway1
18th Mar 2018, 15:06
Interesting, thanks. So, with some more sophisticated sums and research, and taking only slightly more risk than the housing approach, I'd only need £2m rather than £3m.

But guess what: we don't have £2m either.


But you are already £1 million closer to your goal.. ;)

Not a bad 10 minutes work..

redsnail
18th Mar 2018, 18:27
The Guardian article is not quite correct WRT Australia. I remember when the Labor party under Hawke and Keating changed the pension/superannuation system in Australia.
Keating had the foresight to see that the pension burden would cripple Australia in about 30 years time so they scrapped defined benefit schemes and made superannuation compulsory for all workers. This change came about June 30 1985. Why do I remember that date? I started a new job that had a defined benefit scheme, I joined a week after it closed.
It was a money purchase/defined contribution scheme and the employer had to contribute to it too. Essentially, as soon as you started working, you started saving.

The resultant was that Australia does not have a crippling pension burden for aged Australians nor are there pension black holes leaving people in a perilous situation financially.

It was a brave step for a Labor government but history and the recent economic crisis has proven, a very wise move.

ShotOne
18th Mar 2018, 18:36
It probably was a wise move for them but doesn't mean the Guardian article makes sense; emigration isn't necessarily going to improve anyone's pension

radeng
18th Mar 2018, 18:47
When GEC took over Plessey and we were all moved to the GEC scheme, we went from years times 1/80 to years times 1/60 for the pension. When eventually the company was sold on and it became a defined contributions scheme, the company contributed 9% of salary and matched one's contribution up to 18%, so in my last few years, I had the equivalent of 36% of salary going into pension.....I don't think I have ever had as much disposable income as I do now! Of course, having a wife who for ten years was earning almost twice my salary ( I was on half time, half pay from Jan 2008) and not having the expensive luxury of children, there has been a lot of saving. Mrs radeng has her last working day on Maundy Thursday and her 58th birthday on Easter Monday. Having said which, her employer has asked her to do ten days a month for 3 months, but I suspect it will be rather longer while they get someone who can get up and running as her replacement.

pax britanica
18th Mar 2018, 20:34
It all comes down to running an efficient state pension system where everyone has to contribute and where there are no get outs . The money in this fund being completely separated from the rest of government income and expenditure.
It could fairly easily work in a hybrid mode as i believe is the case in France (altho they have their own problems caused by excessive payments to civil servants) where there are steps up from a basic level which is better than Uks state pension . However you can put more in to get more out.
I was lucky enough to get a defined benefits system and they were the norm when i started work - paying the elderly more through pensions which they partly fund is much better than trying to give people benefits when they are poor.

krismiler
18th Mar 2018, 22:52
Australia may not have a pension black hole but there will be a large number of people without enough savings to retire with who will probably end up on poverty line welfare.

A pension scheme has to be funded, defined benefit is great until the money to pay it with runs out.

A system of forced saving like Singapore's central provident fund is a good solution. Employee and employer both contribute into a government backed account which may be used to buy approved nvestments or property. A member can check his account balance at any time and is free to contribute additional funds . When you retire you can access the money, there are no black holes and each individual has a strong interest in making sure he has enough money to live on.

racedo
19th Mar 2018, 00:02
Why do pensioners need £65k a year pension.............

I can understand you want it but to do what ?

Save it so you can give to the kids............

reynoldsno1
19th Mar 2018, 00:45
Australia may not have a pension black hole but there will be a large number of people without enough savings to retire with who will probably end up on poverty line welfare.
The Australian pension scheme is also means-tested ...

oldpax
19th Mar 2018, 00:56
Racedo,pensioners are not all doddering idiots.Having nice holidays ,visiting places you have always wanted to but work gets in the way.So why shouldn't someone who has worked all his life have a good time?

vapilot2004
19th Mar 2018, 01:42
Defined benefit plans for public employees will likely bankrupt California.

While I would agree retirement obligations from the general fund are on the rise, spending growth projections are between three and four times higher for K-14 education and health and human services programs.

West Coast
19th Mar 2018, 02:13
spending growth projections are between three and four times higher for K-14 education and health and human services programs.

My wife is a teacher in California. We just attended a mandatory retirement planning meeting with a CTA financial counselor. The picture is bleak by his estimation as my wife is still 10 years out from retiring. CALSTRS is built on instructional greed and an expectation that they won’t be challenged. They are over obligated and have made poor decisions. Soon it will be time to pay the price which will trickle down to the rank and file.

vapilot2004
19th Mar 2018, 02:35
Sounds like far too many of our US-based multinational conglomerates, including the legacy air carriers, many of which feigned bankruptcy in order to escape their employee obligations.

I would imagine the state of California will take a higher road here, but no one knows for sure and only time and tides will tell.

llondel
19th Mar 2018, 02:48
California is already bankrupt. Defined pensions or not. If you own your own house/domicile you should be okay with a thrifty lifestyle, otherwise, you will be in debt in your grave.

Retirement living in the San Francisco Bay area of California on less than 1,000 U.S. dollars a month: (make that 1,200 dollars a month)


It depends on when you bought your home too. If it was before house prices went crazy then all well and good, otherwise you're going to need $1000/month just to pay the property tax on it. A better retirement plan is to sell up and go live somewhere where you can get the same size house for less than a third of the cost and put the difference towards your pension pot.

vapilot2004
19th Mar 2018, 02:56
For almost 40 years now, Proposition 13 had allowed people to own homes in expensive markets without paying exorbitant property taxes. My wife and I are beneficiaries of this law, living in an older home (in which we have done some remodeling) that was handed down in the family. The value of the land is much more than the rather modest home that sits upon it, but our taxes aren't a whole lot more than aunty's were when she willed it to us.

For several of our friends, their investment in their home, is their retirement. For example, a dear friend and professor's widow of modest means lives in a smallish ranch on an acre lot with a value of over $1.5 million. Back in the early eighties, they paid a little over $100K for that house. The federal government allows a tax-free sale of your primary domicile once in your lifetime. This is our friend's plan once she decides when and where to relocate.

West Coast
19th Mar 2018, 03:10
I would imagine the state of California will take a higher road here, but no one knows for sure and only time and tides will tell.

I almost made the same statement to the CTA counselor, he rightfully pointed out we are past the point of hoping it will be fixed and we’ll into the time an action plan should have been implemented.

Guess it’ll be Home Depot for her when she retires. At least I’ll get a discount on tools.

vapilot2004
19th Mar 2018, 03:20
I sure hope not. A lifetime of dedication and service to the community through teaching should come with a solid, un-revokable reward in retirement.

Is it possible for her to transfer the current value of the fund to a private and personal account?

West Coast
19th Mar 2018, 04:34
I don’t think that’s an option, CALSTRS is a monopoly.

parabellum
19th Mar 2018, 05:39
nor are there pension black holes leaving people in a perilous situation financially.
Our local shire's pension fund is $4million down, i.e. a black hole, as are many public service pension schemes around Australia and each Shire is trying to fill that black hole by continually upping the rates. Recently quite a lot of people who receive the Australian means tested, non contributory, pension found that either their pension was vastly reduced or some found themselves no longer entitled to any pension at all when part of the value of the house owned by the pensioner became included in the assessable assets. As anticipated, those that pissed all their earnings against the wall and saved little or nothing now draw the full pension together with all the other pensioner perks, like 50% off the rates, whilst those who saved for their retirement and bought their own home are now out in the cold, many having to sell up and buy a small unit on a tiny block just to make ends meet.

Ken Borough
19th Mar 2018, 06:49
value of the house owned by the pensioner became included in the assessable assets.

Para,

This doesn't apply to that part of Australia in which I live. The home in which a person resides is not part of assessable assets in the means test for the Federal Government Aged Pension. You with your missus could own a $30m pad in Point Piper - like our PM - and provided you had less than $837000 in other assets and an income of less than $78k a year, you'd receive a part-pension and a card that provides a host of discounts etc. :ok:

ehwatezedoing
19th Mar 2018, 08:25
The federal government allows a tax-free sale of your primary domicile once in your lifetime. This is our friend's plan once she decides when and where to relocate.
Hopefully for your friend, no changes will happen with this particular law until she decide to make her move.

Loggerheads
19th Mar 2018, 08:44
With "defined contributions" you need savings that will return you £65k/year and keep their value against inflation (so that you can eat next year as well as this year).

There's the flaw; why do the arithmetic based on what a final salary scheme would have given you? Be more beneficial to establish what you need.:bored:

But he ho if you would rather continue working than retire with a lower pension and include savings as spending money, then it's entirely up to you.:ok:

Fareastdriver
19th Mar 2018, 10:18
All the people I know that invested everything they had in shares and property croaked within a couple of years of retiring.

Trossie
19th Mar 2018, 11:12
Racedo,pensioners are not all doddering idiots.Having nice holidays ,visiting places you have always wanted to but work gets in the way.So why shouldn't someone who has worked all his life have a good time?
Sure you can have a good time as a pensioner. To quote racedo's question:Why do pensioners need £65k a year pension.............(Oh dear, oh dear, an ellipsis is only 3 dots, e.g. ... )

If you have paid your house off, you are obviously no longer paying into your pension, you are no longer paying to commute to work, you are not paying National Insurance on your pension payouts. A £65k a year pension is a bloody good standard of living!!! Even two thirds of that (and remembering that you would be paying higher rate tax on all that one-third reduction, so 20% of that difference would never have been available to you anyway) would leave you at a very comfortable standard of living.

A lot of people panic without actually doing their sums. And I suspect that this not-so-clever writer of that Gruinard article is one of those: simply the costs of emigrating to Australia will significantly deplete your resources. Stay put here and put that money that you would have had to shell out going to Australia into your UK defined contribution pension scheme (you don't get the same tax benefits for what you spend on emigrating that you do for putting money into your UK pension). And don't pay attention to 'quacks' with grand, but ill thought-out, plans for any quick fixes.

Tankertrashnav
19th Mar 2018, 11:47
I must admit I am sometimes bemused by the sums that people seem to think are necessary for a good life. I suppose it all comes down to what you regard as "having a good time". I guess I am fortunate in that most of the things that cost money are very unimportant to me. I generally find eating out a disappointment, travel has become a chore, I'm not interested in fast/luxurious cars or the latest electronic gadgets. Mrs TTN has similar tastes, plus she is not in the least interested in clothes/handbags etc ! I dare say our life may seem very boring to some, but we like it. We have a pleasant comfortable house, we are warm in the winter, and have money in the bank for emergencies and we have all the "stuff" we could ever want.

Pension? A little over £25K, and we don't even spend all of that.

... simply the costs of emigrating to Australia will significantly deplete your resources.

When she retired my niece moved to Australia to join her daughter and family. She had to shell out a little over £30k for her resident's visa - presumably a down payment on likely healthcare costs in future years. You cant emigrate for a tenner any more!

Gertrude the Wombat
19th Mar 2018, 12:14
Why do pensioners need £65k a year pension.............
I was taking the usual defined benefit pension (2/3 salary, 40 years at 1/60) and trying to work out what one would need as savings to match that.

charliegolf
19th Mar 2018, 12:18
(Oh dear, oh dear, an ellipsis is only 3 dots, e.g. ... )

.

Who said his was an ellipsis?

CG

Trossie
19th Mar 2018, 13:13
Who said his was an ellipsis?

CG
True, looked more like 'dot diarrhea'!


TTN has yet another bit of information that shows that the writer of that Gruinard article didn't know what he was talking about. 'Fake News'? Very likely, and it has caused too much concern by those swallowing his nonsense.

Stan Woolley
19th Mar 2018, 13:38
The recent posts by Trossie and Tankertrashnav (posts 29&30) have added a tiny bit of brightness to my day. So I thank them both.

As one who had his income and means of earning prematurely slashed by the fickle finger of fate, I have invested a lot of time into the ‘retirement’ topic. I was beginning to think that either:

1) I was deluding myself about how much I might need to survive.
2) Some on Jet Blast had no idea of how the average man survived.

I could be wrong, fate could have me wishing I had money to spare, but...

I think I, like TTN, now enjoy the simple life. The real joys come not from toys and luxuries, but from the heart.

Trossie
19th Mar 2018, 13:49
I was deluding myself about how much I might need to survive.A lot of people delude themselves about that. I did the sums to work out what I needed for exactly the same lifestyle as now and (with all those deductions mentioned above taken into account) was surprised how low the figure was. And we could still live satisfactorily comfortably on quite a bit less.

Stan's last sentence is the most valid on here.

Highway1
19th Mar 2018, 13:57
A lot of people panic without actually doing their sums. And I suspect that this not-so-clever writer of that Gruinard article is one of those: simply the costs of emigrating to Australia will significantly deplete your resources.

The costs of emigrating are very high but if you have a family it might be worth it simply for the better education system if the lady who wrote the article is typical of what one encounters in a UK University..

Or perhaps she is just typical of Guardian correspondents..

Trossie
19th Mar 2018, 14:15
... if the lady who wrote the article is typical of what one encounters in a UK University..

Or perhaps she is just typical of Guardian correspondents..

I would take the second comment there as being the valid one. There are a lot of really good universities in Britain and Britain always features extremely well in any lists of the world's top universities. You can't blame UK universities if a few idiots slip through and write misguided articles in the Gruinard.

Freedom of speech means that people like that have a right to write misguided articles like that and the Gruinard has a right to publish the twaddle.

Freedom of thought means that people (should!!) have the ability to see right through that twaddle!

(And could the Gruinard add a footnote to any of those sort of articles that the whole 'defined benefit' pension system, that mostly only public sector workers now really enjoy, started to become unstable leading to it's eventual crumble when their darling Labour Party's Chancellor Gorgon Brown pulled out one of the pension system's significant building blocks as far back as his '97 Budget. The bar-steward!!)

galaxy flyer
19th Mar 2018, 14:20
I don’t think that’s an option, CALSTRS is a monopoly.

It happened in Rhode Island, huge haircut for state retirees a few years ago. CT retirees are very worried as the state hadn’t funded the plans full6 in years.


GF

Ancient Observer
19th Mar 2018, 14:33
Whilst I do not like the ending of DB scemes in the UK's private sector, I am very worried that the Guvmint does not seem to care about the future cost of Civil Servants pensions, which are Gold plated. It sets a very bad example with its MPs pensions, which are solid Gold.
Why is an MP's pension so much better than anybody else's? Cos they set the rules.

Thomas coupling
19th Mar 2018, 14:34
Of course pensions are important, I keep telling myself - because I am about to retire, perhaps!
I'm a numbers guy and I base all my computations on numbers. The main ones are this for the UK:

The average white male will die @ 83.
The average white male will enjoy a "healthy life" until 63.

So, it's a fine line between wanting to keep working (as Stephen Hawking said: productive and purposeful) and retiring.
But if we are to believe the actuaries then any healthy life past 63 is a blessing. So why not live it the way YOU want to live it and not they way your employer wants you to live it (making his pockets deeper). RETIRE!

Of course - the corollary is also true. IF you thrive off work - you have probably already 'retired' in your head, you just didn't notice it!!

THE controlling factor in our capitalistic world is of course money and having enough of it.
Until youngsters are either forced into saving towards a pension or the subject is made to look a lot more attractive, the future looks bleak.
Final salary pensions will be extinct within 10 years.
The government must do everything to make contributions work hard (IE tax free at entry AND exit).
Inflation must be kept down.

I wonder if the results are out regarding the change to the pension rules a few years ago - where you can take all of your money out and buy a Lamborghini!!
Have individuals (a) done this and (b) survived?

Trossie
19th Mar 2018, 14:40
The average white male will die @ 83.And "average" is the important word. If your planning is done on that then you need to ensure that you remain 'average' and don't live to 100 as many, many people now do, and increasingly healthily too.

Ancient Observer
19th Mar 2018, 15:00
In the UK, Gordon Brown ruined pensions. He removed many of their tax savings.

Loggerheads
19th Mar 2018, 18:42
I was taking the usual defined benefit pension (2/3 salary, 40 years at 1/60) and trying to work out what one would need as savings to match that.
Which is likely to have as much relevance to what you need to live comfortably in retirement as the capacity of Wembley Stadium.:ugh:

And "average" is the important word. If your planning is done on that then you need to ensure that you remain 'average' and don't live to 100 as many, many people now do, and increasingly healthily too.

IMO it's a huge mistake to plan finances on the off chance one may live to 90+, especially if it means working longer or being more frugal in early retirement. If I make 90+ I'll not be too bothered about maintaining the same standard of living, I won't be living it!

radeng
19th Mar 2018, 18:48
Unless your pension income is related to the inflation rate, £65k now may well be insufficient in 10 or 15 or 20 years time.

Gertrude the Wombat
19th Mar 2018, 19:30
The costs of emigrating are very high
The biggest cost some relatives of mine had was when they decided they'd had enough of Oz and moved back to the UK - house prices in the UK had gone up far faster than they had in Oz.

Gertrude the Wombat
19th Mar 2018, 19:32
Which is likely to have as much relevance to what you need to live comfortably in retirement as the capacity of Wembley Stadium.:ugh:
My recollection is that the discussion at that point was comparing defined benefit with defined contribution. That's what I did.

We do at present have more money than we know what to do with (give or take kids wanting house deposits) so we'd probably survive, even with our current lifestyle, on quite a bit less.

SARF
19th Mar 2018, 19:58
I was lucky enough to have 30 years of final salary pension from a well known U.K. bank.. despite their many efforts to persuade me I was better of leaving the scheme, for what was thn known as a money purchase fund.....

Anyway it was always assumed that the fund was worth 20 times your pension
Let’s keep it simple. Say it’s ten grand a year from 60. Thus it’s worth 200 k then

I could take it from 55 and have the fund reduced accordingly..

They are currently offering me.. at age 51. (So 9 years before it is due) 47 times it’s annual predicted worth to cash it in now... you have to love an a inflation blip and criminally low bond rates...

They are also offloading the final salary pension fund from their books and assuring all members that it will be a fully funded stand alone fund by 2020.. I tried not to laugh

I will have jumped through all the legal hoops to cash mine in by next month.

Trossie
19th Mar 2018, 20:17
...

IMO it's a huge mistake to plan finances on the off chance one may live to 90+, especially if it means working longer or being more frugal in early retirement. If I make 90+ I'll not be too bothered about maintaining the same standard of living, I won't be living it!

Let's talk again when you are one of those fit and active 90 year-olds that are around more and more now. Look up the population of Britain that is over 100, it might astound you!

Loggerheads
19th Mar 2018, 20:40
My recollection is that the discussion at that point was comparing defined benefit with defined contribution. That's what I did.
Really?:bored:
I don't consider myself "young" but I have reached the conclusion that I am "never going to be able to retire".


Let's talk again when you are one of those fit and active 90 year-olds that are around more and more now. Look up the population of Britain that is over 100, it might astound you!
I'll be a right miserable old sod having missed out during my able years as I've hung on to every penny in order to buy adult nappies and extra blankets for my 90s.
In all seriousness I am of the opinion the thing to do is enjoy one's self when able and let the 30% chance of reaching 90 sort itself out.

Fareastdriver
19th Mar 2018, 21:44
Eat drink and be merry because shrouds don't have pockets was my lifestyle. I never missed the money that went into my pension schemes. My pensions are well above the average wage so I can still rush about a bit. I've just come off a Caribbean cruise which was full of geriatrics so not again. I sold my house to my daughter over seven years ago there is no problem with inheritance tax and when I get too old and doddery a care home won't drain that value away.

It will be wine women and song for a few years yet.

racedo
19th Mar 2018, 22:14
Racedo,pensioners are not all doddering idiots.Having nice holidays ,visiting places you have always wanted to but work gets in the way.So why shouldn't someone who has worked all his life have a good time?


Er nobody questioned that least of all me but the need for £65k when in reality you can live very well on half that is overlooked.

Gertrude the Wombat
19th Mar 2018, 22:17
in reality you can live very well on half that
If so ... where do I get £1.5m then?

racedo
19th Mar 2018, 22:19
I was taking the usual defined benefit pension (2/3 salary, 40 years at 1/60) and trying to work out what one would need as savings to match that.


I think in retirement that a £20k a year pension before getting Old age pension will allow you to live ok.................. not spectacularly but also not worrying about the heating bills either.

People laugh at that figure but no work costs, pension costs etc plus assumming house fully paid off.

Yup there are some who want to travel the world but travelling the world and £20k will get you a long way, course if want to stay in 5* and fly 1st class it won't but most people have no desire to do that anyway.

racedo
19th Mar 2018, 22:22
After paying contributions for 34 years in NI then you get zero benefit from any futher years so assumming someone started at 21 then after 55 there is no extra benefit for that.

Guy met recently getting to 34 years and then heading off to US for 10 years and working there.

Gertrude the Wombat
19th Mar 2018, 22:43
Yup there are some who want to travel the world but travelling the world and £20k will get you a long way, course if want to stay in 5* and fly 1st class it won't but most people have no desire to do that anyway.
I certainly have no desire to hitchhike with a backpack as I did when younger, or cycle round NZ as our kid did recently.

Don't want 5* (completely plastic artificial experience, no connection with whichever country you're in), and we fly economy (but not on Ryanair, there are limits), but nonetheless we managed to rack up £8k or so for a couple of weeks in a long haul destination where we thought that at our age we'd be better off with a car and driver and guide than with just the local buses and the Lonely Planet.

Do that twice a year and you've pretty well used up your £20k (by the time you've paid your council tax), and that still leaves you with 48 weeks to fill.

MG23
20th Mar 2018, 04:50
IMO it's a huge mistake to plan finances on the off chance one may live to 90+

Given the rapid advances in anti-ageing research, the vast majority of healthy people sixty or under today are likely to live to 90+. And probably quite a lot plus.

If the economy remains viable enough to fund it. And we don't get a war that kills most of us.

layman
20th Mar 2018, 06:51
We are mostly fitter / healthier / wealthier than our predecessors ...

In Canberra today I played tennis today with a friend of mine who has just returned from Penang where he played in a week-long tennis tournament! He will be 83 next week.

And he is not just a one-off example, there are many tennis players in Canberra of a similar vintage

regards
layman

Loggerheads
20th Mar 2018, 08:07
Given the rapid advances in anti-ageing research, the vast majority of healthy people sixty or under today are likely to live to 90+. And probably quite a lot plus.
Simply not so.

If so ... where do I get £1.5m then?
Sounds like you just want a good moan, rather than what you say having much relevance to your retirement income needs.

Trossie
20th Mar 2018, 09:07
If so ... where do I get £1.5m then?Too late. You should have started saving decades ago.

(From the pension sums that I've done you're planning to live on over twice what I've worked out I need. Fancy lifestyle you enjoy, then??)

VP959
20th Mar 2018, 10:58
Er nobody questioned that least of all me but the need for £65k when in reality you can live very well on half that is overlooked.

I agree. Early retirement came in an unexpected rush for me, with a few days to decide whether to take the offer and retirement to follow within four weeks if I did.

My late father in law advised me not to worry about living on a bit over half my income, as he said he'd found that he simply didn't spend as much money once he'd retired.

The other factors are that you can usually stop paying NI contributions if you've enough "credit" in the system (something like 30 or 35 years worth), so that's a hefty bit off your pre-tax deductions, plus, if you're a higher rate tax payer then an income cut of 50% gross is nothing like a 50% cut in net income, after all deductions. I ended up with a "take home" pension that was around 2/3rds of my previous take-home pay, and can honestly say I didn't notice the drop in income at all. I no longer had any work-related expenditure, didn't need to buy "work clothes" etc, had less wear and tear on my car, and it all added up to lower overall outgoings.

Now that I get my state pension as well, I feel reasonably well off, within an income that is a fair bit below £65k. I even manage to save around £800 a month, or rather have about that much left over every month, which is more than I seemed to have left over when I was working. I have no doubt at all that living on a pension of £25k to £30k would be quite comfortable in practice. When I pop off my other half's total pension isn't going to be much more than about £25K, plus any state pension, and she reckons she will be quite able to manage on less than that if she had to, without skimping on the things she enjoys.

cattletruck
20th Mar 2018, 11:04
Featuring more often in Australian newspapers of late are stories of retired women running out of their superannuation funds early. This would most likely be caused by both the gender pay gap of the times and being forced to stop work to raise a family.

No doubt this will balance itself out with the other gender as under-employment and over-immigration erode the average standards of living.

Gertrude the Wombat
20th Mar 2018, 12:44
(From the pension sums that I've done you're planning to live on over twice what I've worked out I need. Fancy lifestyle you enjoy, then??)
You should be able to stay alive on state pension plus means tested benefits. I fancy a fancier lifestyle than that, yes.

Blacksheep
20th Mar 2018, 13:35
I'm still working in order to eat and keep the heating going.

Thank you Gormless Gordon for setting up the regulations that led to a dodgy building society-become-bank shifting their worthless "mortgage-backed" junk-bonds into my pension scheme.

MG23
20th Mar 2018, 15:01
Simply not so.

We now have a very good idea of what causes ageing and 'natural causes' death, and various means of fixing most of those things. It's just a matter of testing and refining them.

Fareastdriver
20th Mar 2018, 20:18
I'd rather be mummified when I'm dead; not when I'm alive.

racedo
20th Mar 2018, 23:10
We now have a very good idea of what causes ageing and 'natural causes' death, and various means of fixing most of those things. It's just a matter of testing and refining them.


Some 30 odd years ago I remember a Scientist being asked about living for ever, his comment was "I keep hearing this and then you also hear how they struggle for something to do on a wet Sunday afternoon".

parabellum
21st Mar 2018, 04:50
This doesn't apply to that part of Australia in which I live. The home in which a person resides is not part of assessable assets in the means test for the Federal Government Aged Pension. You with your missus could own a $30m pad in Point Piper - like our PM - and provided you had less than $837000 in other assets and an income of less than $78k a year, you'd receive a part-pension and a card that provides a host of discounts etc. :ok:


Lucky you Ken, just don't plan to retire to Victoria, and since the plan to include all or part of the value of your home is a federal thing you better do some research as to where you do retire.

Ken Borough
21st Mar 2018, 12:58
Para,

The assets test for the Aged Pension excludes the value of one's principal place of residence. This is defined as the principal home you live in, the land it’s on, up to 2 hectares. To be exempt from the assets test it must be on a single title and not be using it mostly for business

I realise there are 'funny' things happening in Victoria at the moment (:E) but I don't think Andrews and his mob have done anything to affect the C'wealth Aged Pension. :ok:

Ancient Observer
21st Mar 2018, 16:38
Canberra? Playing tennis?
I'm not sure that Canberra is really real. If it is, they roll out the streets at 11.30 and roll them back up again at 15.00.

Altho the War Memorial is impressive.

MG23
21st Mar 2018, 16:45
I'm not sure that Canberra is really real. If it is, they roll out the streets at 11.30 and roll them back up again at 15.00.

I've been to somewhere the bus driver claimed was Canberra, but I'm still not sure it's real. It was more like one of those Chinese ghost cities where there are lots of buildings but no people.

Kelly Hopper
21st Mar 2018, 16:51
'Tis a strange conversation to me this?
I retired 3years ago at 54. Since then I have calculated my total expenditure with 2 cars, motorbike, a boat, a social life and dependants. It!'s £15,000 p.a. I want for nothing I don't have but read of others talking £65,000 p.a? I never even earned that! I have no more wish to travel, done that for far too long, so accounting for inflation which = 20% increase over the last decade, and a life expectancy of 80 ( not a guess, a prediction), £400k, with interest, should see me out? Yet you are talking multiple millions? I don't get it?

MG23
21st Mar 2018, 16:57
Yes. I'm always amused when people talk about how they need a bigger yearly pension than 95% of the population earn in order to retire.

I'd be happy to have enough to live in a shack in the woods with a good Internet connection. By the time I'm ready to move there, VR will have made most physical needs to travel or have large houses obsolete.

Loggerheads
21st Mar 2018, 17:56
Quite right Kelly. As I've said in the thread there are many open their mouths without engaging brain.

So whilst you enjoy your retirement they slave away in the belief they can never retire. Their loss!:)

Tankertrashnav
22nd Mar 2018, 10:31
When I was teaching I had a chat with one of our senior teachers, a head of year. He confessed to me he was heartily sick of the profession and wished he could get out. His wife, also a senior teacher, was of the same opinion. I asked him why they didn't just both jack it in there and then. He said they needed a good income to enable them to take three long haul holidays a year. When I asked him why they needed the holidays he said it was to wind down from the stress of teaching.

And I really don't think he saw the irony!

Gertrude the Wombat
22nd Mar 2018, 12:35
He said they needed a good income to enable them to take three long haul holidays a year. When I asked him why they needed the holidays he said it was to wind down from the stress of teaching.
I knew a doctor who would do locum work until the stress became too much, then she'd fly off somewhere for a couple of months. I think she worked about half the time, overall.

parabellum
23rd Mar 2018, 02:57
Ken Borough - You are quite right, I apologise. Have been right through the blurb and nowhere does it mention primary home being included in assets. I did notice that the upper limits before the pension starts to reduce have come down a lot, all a bit fluid at the moment with several sets of tables for different dates. You are right about strange happenings in Victoria, here the ALP are up to their neck in blatant corruption with no respect for the rate payers and it would be good to see them gone next November.

Ken Borough
23rd Mar 2018, 03:53
Para,

That's OK. the upper limits for both the assets and income tests were both lowered by that economic whizz kid name Joe hockey. He also increased what's known as the taper rate which meant a double-hit on those affected. The Tory Greens voted to allow the changes through the Senate for SFA in return. I'd trust the ALP any day before this treacherous and delusional minority. So glad they were done like a dinner in Batman!

The Centrelink stuff isn't easy to get one's head around but it should be. I always feel sad for those who aren't as fortunate as some of us! Now wonder they are ripped-off and feel disadvantaged, often through little fault of their own.

While the ALP is in a spot of bother south of the Murray, the Libs in NSW under 'our Glad' aren't travelling all that well so don't for a minute feel badly done by. :ok: