Pensions

[maybelateron]

8 minutes ago, Jwoodgardenmaintenance said:

I've always liked using cash rather than plastic money (cards) I dont have a credit card and my debt I've got which isn't much is all getting cleared off fairly sharpish and Ive considered finance for a new digger and 4x4 but I've talked myself out of it I can't bare the thought of it sitting in the drive with no work while I'm paying out for it isn't ideal plus I don't like giving someone 4-5k for lending me the money

One thing that seems crazy these days is people who are told there credit rating is low, when the reason for this is they have not been borrowing money, or using a credit card. Our three grown up children got wise to this and made sure they had enough use of credit card (but paying it off in full each month) to help there ratings when applying for their mortgages.

[aspenarb]

3 hours ago, Stephen Blair said:

I started mine when I was 16, I was told my pot will be over £450k, 27 years later at £150 a month my pot might make £180k.  I put £1800 a year in and my annual payout will be £1500 a year in 2041! 

  The guy who sells your pension won’t be around and it’s mostly just salesman making money.

so at 55 I’m cashing it in, pay the tax and hopefully get a couple of deposits for my boys first properties if I’m lucky enough to still be here.

 

 

And there is the rub Stephen, with the best will in the world any plans made for retirement at such an early age need to be flexible because of change. I filled my boots with property for my retirement at a very early age but will not be benefiting from any of it because the kids need them more than I do.  

 

Bob

[Jwoodgardenmaintenance]

27 minutes ago, maybelateron said:

One thing that seems crazy these days is people who are told there credit rating is low, when the reason for this is they have not been borrowing money, or using a credit card. Our three grown up children got wise to this and made sure they had enough use of credit card (but paying it off in full each month) to help there ratings when applying for their mortgages.

Ive been told that by a few folk the only thing is I dont want / need a mortgage or any credit I've have always made do with what I have and if I need something and I can't afford to buy it out right I'll improvise or just do without I dont like the thought of other people having the right to pull the plug on something I have partially invested in and losing out on it 

[openspaceman]

12 hours ago, difflock said:

Someone mentioned being mortgage free at retirement,

I have reason to imagine that is key to financial freedom, and retirement to whatever extent.

I think it was critical for me as if I had to pay a commercial rent it would be £24k a year, so while the house is worth a lot of money it's not an asset I can make use of, in the meanwhile my odd jobs pay for running cots, council tax etc. and my state pension is largely untouched. I couldn't even afford 100/week rent.

 

My wife has retired friends who are staunch labour supporters( this area is very blue) and refused to exercise their right to buy on principal for their council house. The social housing rent, while subsidised, has increased such that they need housing benefit despite both having worked in the public sector.

[difflock]

My wife, while a University student, attempted to persuade her grandmother to buy their council house in Greenock, for very very little money, her grandparents being very longstanding tenants. Despite both still working and running 2 cars and 2 caravans(we never could understand the 2 caravans btw), i.e. they could well have afforded the purchase, they would not countenance the idea. But spent stupid amounts fitting double glazing etc etc etc, generally just before the Council did the same for the other tenants.

Plumb pig-headed daft.

Lovely people though.

But still daft.

[Jwoodgardenmaintenance]

I live in a council house at the minute and I wouldn't even consider spending any money on the house that I can't take with me when I moved in they gave me £200 worth of decorating vouchers and the walls are fairly smooth so painted the lot and carpets can be fetched with me the best thing is when I move out if I don't take carpets ect I'll get fined. For me renting is just a short term thing till u build the funds for my own house 

[Steven P]

Pensions? Here are my thoughts for what they are worth.

The savings side of things are good value:

- You get tax breaks with them, so every £1 you see in your pocket at the end of the month is worth more in a pension

- Companies will pay into a pension on top of your salary. For example, mine will match up to 7% of my salary as a pension contribution. I'd be a fool not to pay in and loose out on this

- The investment is compounded, so you earn £1 in interest this year, next year that £1 also earns interest. Over time this all adds up, I forget what the sums are but something like every 10 to 15 years (not sure might be longer) your money doubles because of this.

- You cannot touch it, so a bad month and you still get a pension with what you have saved so far.

 

So as a savings scheme for retirement a pension scheme works good.

 

BUT at the end of it when you want the money. Mine are offering me 1/33rd of the pension pot back every year. So I have to live for 33 years before I use up what is in the pot.. retire at 67, pot will be empty at 100.. or well after I anticipate being dead. I can take it all out and hope for the best, die at 80 and the kids get the leftovers and all the interest it has earnt in those 13 years.. but the government want their cut out of that and taxes.

 

For affordability, when I pay off the mortgage I reckon I can nearly give it all up, sell my car, (and save its tax and petrol and so on), stop the odd ork treats - the snacks, coffee, bacon rolls, the commuting - life can be cheaper

[openspaceman]

46 minutes ago, Steven P said:

Pensions? Here are my thoughts for what they are worth.

The savings side of things are good value:

Yes

46 minutes ago, Steven P said:

- You get tax breaks with them, so every £1 you see in your pocket at the end of the month is worth more in a pension

Yes

46 minutes ago, Steven P said:

- Companies will pay into a pension on top of your salary. For example, mine will match up to 7% of my salary as a pension contribution. I'd be a fool not to pay in and loose out on this

Unfortunately I was self employed but would have taken advantage if I had been employed

46 minutes ago, Steven P said:

- The investment is compounded, so you earn £1 in interest this year, next year that £1 also earns interest. Over time this all adds up, I forget what the sums are but something like every 10 to 15 years (not sure might be longer) your money doubles because of this.

- You cannot touch it, so a bad month and you still get a pension with what you have saved so far.

Yes

46 minutes ago, Steven P said:

 

So as a savings scheme for retirement a pension scheme works good.

Yes plus as long as you pay national insurance you get a state pension, I benefit from this but younger people may not.

 

46 minutes ago, Steven P said:

 

BUT at the end of it when you want the money. Mine are offering me 1/33rd of the pension pot back every year. So I have to live for 33 years before I use up what is in the pot.. retire at 67, pot will be empty at 100.. or well after I anticipate being dead. I can take it all out and hope for the best, die at 80 and the kids get the leftovers and all the interest it has earnt in those 13 years.. but the government want their cut out of that and taxes.

Has the billiard playing accountant, Inoff, contributed to this thread?

 

In the past the fund you saved with would insist you purchased their annuity at retirement. This is no longer the case, so  with the current low interest rates if you are not  offered a good deal, you do not have to crystallise the fund into a lump sum plus annuity, in fact you need do nothing with it until you are 75, up till then it does not form part of your estate so you can nominate who it should go to should you die before 75..

 

If you buy an annuity  an peg it early then they keep the balance of your fund.

 

Bear in mind this is a poorly paid job for workers ( I'm excluding those here that run companies) so given the tax threshold is £1180 you can take a 25% cash sum and leave the remaining pension invested till 75 but draw any interest AND/OR capital annually as long as your income (state pension plus odd jobs plus income from private pension satys below £1180 and the fun remains intact and not notice a big loss in disposable income.

 

I'll have to let you know what happens next if I reach 75.

 

I think I can manage okay on this but as  said earlier, only because I pay no rent.

46 minutes ago, Steven P said:

 

For affordability, when I pay off the mortgage I reckon I can nearly give it all up, sell my car, (and save its tax and petrol and so on), stop the odd ork treats - the snacks, coffee, bacon rolls, the commuting - life can be cheaper

Yes, in fact I run three cars and two bikes but don't do expensive hobbies. I also found cooking meals from fresh ingredients is way cheaper than the microwave meals I used to eat after work as I have time ( not that they take much more time if you have the ingredients). My biggest saving has come from joining team silky fox 15 months ago.

[Stephen Blair]

5 hours ago, Squaredy said:

Your maths is a bit wrong somewhere.  Depending on what age you retire and what options you go for a pension pot of £180k will pay a yearly pension of around £5000 to £9000.  If you were to delay retirement you could get substantially more than this even.

 

Maybe you are looking at a projection that is based on the fund value now not when you retire?

Nothing wrong with my maths, I know when I’m being taken for a ride.  My fund value will be around £130k when I’m 55, I guessed the £180k through rose tinted spectacles for when I was 65.  You are too quick to blame me for the math rather than question the people I invested in.

[Squaredy]

1 minute ago, Stephen Blair said:

Nothing wrong with my maths, I know when I’m being taken for a ride.  My fund value will be around £130k when I’m 55, I guessed the £180k through rose tinted spectacles for when I was 65.  You are too quick to blame me for the math rather than question the people I invested in.

Sorry Stephen I wasn't blaming you, I just pointed out that if you have a fund of £180,000 you will get a lot more than the £1400 per year you stated.  If your fund is £180,000 and the fund manager only offers £1400 per year take the fund elsewhere - you have the right to take that fund to any annuity provider you like, and at age 65 you will get at least £6500 per year, increasing every year.  

 

Your pension provider of course may not have drawn to your attention the fact that you can shop around when you come to retire, but you certainly can.  In fact as another member said you now have a few other options if you do not fancy the annuity route.