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cashinmattress

Work Until 77 For Comfortable Retirement (or To Retire At All)

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'Work until 77 for comfortable retirement'

Many Britons hoping for a comfortable income at retirement could find themselves working until they are almost 80 years of age, according to new research.

Fund management group, Fidelity International, says workers relying on company pensions, linked to stock market growth, also known as defined contribution plans, need to significantly top up their pension, with an additional 8% of their salary each year, if they wish to retire at the standard age of 65.

Industry experts generally acknowledge that a comfortable income in retirement is two thirds that of the final salary in employment.

But while many retirees do get by on much less, they can be significantly worse placed to cope with rising costs, such as fuel bills or long term care.

The UK mean annual salary is £26,020 and employees, who want to retire on two thirds of their final salary but rely solely on their current employer contributions, at an average of £140 will have to work until they are aged 77, assuming average stock market performance and 40 years of contributions.

Anyone who wants to retire on two thirds' final salary at age 65 will have to put in an extra 8%.

For average salary earners, this means topping up with £173.47 of their own cash per month, which would provide a pension pot of £956,000. If they didn't after 40 years work they would be left with just £427,000.

If employees cannot afford 8% of salary they might be able to nearly double their final pension pot if they could stretch to finding an extra 6% (£140 plus £130.10), which could turn £427,000 into £824,000.

And if workers could put in an additional 9% of their annual salary - £140 plus £195.15, they may even be able to build a million pound pot.

Julian Webb, of Fidelity International, says: 'With fewer people in final salary pension schemes, more and more have to make big decisions about their retirement saving – yet they don't have to work until they drop.

They can choose to build up a pension pot large enough to provide a relatively comfortable income in retirement. According to our analysis, a young worker on the average wage, whose employer puts in the average amount, only needs to find an extra 8% of salary if they want to retire at 65.'

Adding in extra money into a pension is straightforward. Known as additional voluntary contributions (AVCs), they are arranged through the employers' payroll, although the employee gets to decide where this extra money is invested.

Other research from adviser firm Hargreaves Lansdown, has found that, a 40-year-old man contributing an extra £200 a month to a stakeholder, personal pension or Sipp could expect an extra £4,500 of income per year in retirement.

Read it and weep, especially you 'house is my pension' nuggets.

You will be poor as dirt and be a ward of the state if you follow your own 'investment' advice.

And you can bet that the government will put the goalposts back well before we reach an epidemic of retirees lapping up the last remaining wealth from the working generation.

I prefer this option: Soylent Green / Sol goes home

EDIT: Or even better:

Edited by cashinmattress

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According to our analysis, a young worker on the average wage, whose employer puts in the average amount, only needs to find an extra 8% of salary if they want to retire at 65.'

Oh, only a mere 8%. That's alright then. Seriously, a "young worker on the average wage" is generally too hard up to chuck that much aside every month, especially when there's no particular reason to suppose they'll ever see it again.

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I don't see how this strategy will work on a societal level. There aren't enough jobs to go around already, and many of the existing jobs are going to disappear year by year as automation of various kinds replaces them. So older people who do stay employed imo are just going to be taking the job of a younger person who will then be unemployed.

Our elites want to raise the retirement age.. I would be looking at it the polar opposite, how do we lower the retirement age, and free up good jobs for young people?

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I heard the results of a survey recently where something like 80% of British people said they were happy to work until 70 to make up their pension shortfall. It doesn't occur to them to simply ask their employer for more money instead?!! This is the same mentality that caused the housing bubble - if you can't afford a house or pension simply borrow more or work until you drop dead.

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I heard the results of a survey recently where something like 80% of British people said they were happy to work until 70 to make up their pension shortfall. It doesn't occur to them to simply ask their employer for more money instead?!! This is the same mentality that caused the housing bubble - if you can't afford a house or pension simply borrow more or work until you drop dead.

That works for a small number of people with unique skills that aren't easy to replace. The employers response to most people would quite rightly be to decline the request and tell the employee if they don't like it they are free to resign and find someone who will pay.

If you ignore the last 15 years or so I think you'll find that never in history has a pensioner been able to expect to spend the last 25 years of their lives jetting or sailing off to exotic locations for 3 months a year whilst spending the rest living it up at home. This is just a return to the norm.

Edited by impatient_mug

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I see those dread words 'average market performance' cropping up again in pension forecasting.

My brother has a 'frozen' pension plan with Standard Life.

In 2000 it contained £45K

In 2009 it contains £60K

That's what management charges and market 'volatility' do to pensions.

Save your money in ISA's. No risk, no parasites skimming your fund.

You'll be a lot better off, even on today's crap interest rates.

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I heard the results of a survey recently where something like 80% of British people said they were happy to work until 70 to make up their pension shortfall. It doesn't occur to them to simply ask their employer for more money instead?!! This is the same mentality that caused the housing bubble - if you can't afford a house or pension simply borrow more or work until you drop dead.

And the employer will get the money to do this from where?

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How is that an arguement against BTL to fund a pension?

I'm 30 in a few weeks and have a tiny pension pot.

However, if I could buy 3 x repos and the rent covers the repayment mortgage then in 25 years time I'm going to own 3x mortgage free properties. No doubt there would be periods of time where I lost out or had costs to pay but that is true of any investment.

Even if they are only worth what I paid for them in capital terms I'll still have 3 lots of rent coming in to me as income every month (less any expenses or costs). To me that sounds a lot better than any of the pensions I can sign up to and I can always move into one of them and sell my main house if I need a huge cash boost.

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How is that an arguement against BTL to fund a pension?

I'm 30 in a few weeks and have a tiny pension pot.

However, if I could buy 3 x repos and the rent covers the repayment mortgage then in 25 years time I'm going to own 3x mortgage free properties. No doubt there would be periods of time where I lost out or had costs to pay but that is true of any investment.

Even if they are only worth what I paid for them in capital terms I'll still have 3 lots of rent coming in to me as income every month (less any expenses or costs). To me that sounds a lot better than any of the pensions I can sign up to and I can always move into one of them and sell my main house if I need a huge cash boost.

That is an investment plan, although many will argue over the merits of whether it's a good investment plan or not.

However the problem with BTL is that many had interest only mortgages with no plan to repay the capital after 25 years, that is not an investment plan that's a gamble. The gamble being house prices only ever go up and that selling the house in 25 years will give you a profit and clear the debt, or you just remortgage again.

The clever money said you don't repay the debt just service it as this gives you a bigger profit??? Again this bigger profit only comes if house prices go up.

You clearly haven't thought your BTL plan through, I'd see a proper adviser who'll tell you how to maximise your debt and magically never pay it back. :P:P

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How is that an arguement against BTL to fund a pension?

I'm 30 in a few weeks and have a tiny pension pot.

However, if I could buy 3 x repos and the rent covers the repayment mortgage then in 25 years time I'm going to own 3x mortgage free properties. No doubt there would be periods of time where I lost out or had costs to pay but that is true of any investment.

Even if they are only worth what I paid for them in capital terms I'll still have 3 lots of rent coming in to me as income every month (less any expenses or costs). To me that sounds a lot better than any of the pensions I can sign up to and I can always move into one of them and sell my main house if I need a huge cash boost.

Or build up your own profitable business, employ and train some honest loyal employees, look after them well and you can then live from the profit of your hard work and enterprise. ;)

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Guest มร หล&#3
'Work until 77 for comfortable retirement'

Read it and weep, especially you 'house is my pension' nuggets.

You will be poor as dirt and be a ward of the state if you follow your own 'investment' advice.

And you can bet that the government will put the goalposts back well before we reach an epidemic of retirees lapping up the last remaining wealth from the working generation.

I prefer this option: Soylent Green / Sol goes home

EDIT: Or even better:

West meets East . . .

Their system doesn't work.

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I'm hoping to stay active and earning - albeit with more hols - until I die. What's the alternative, watching daytime TV? Total retirement without something useful to do sounds like Hell to me.

For me the problem isn't no retirement, it's that people do something miserable and unsatisfying through their lives, never mind when they're old. And that takes us off into debates about the channelling of people into dronelike existences.

Why else would the hope for so many be the termination of what they spend their lives doing, and the crisis is the death of that hope? How totally f*cking sad is that?

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Or build up your own profitable business, and you can then live from the profit of your hard work and enterprise. ;)

Edited for risk- and hassle-reduction :P

(edit: strike-through still not working!)

Edited by huw

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How is that an arguement against BTL to fund a pension?

I'm 30 in a few weeks and have a tiny pension pot.

However, if I could buy 3 x repos and the rent covers the repayment mortgage then in 25 years time I'm going to own 3x mortgage free properties. No doubt there would be periods of time where I lost out or had costs to pay but that is true of any investment.

Even if they are only worth what I paid for them in capital terms I'll still have 3 lots of rent coming in to me as income every month (less any expenses or costs). To me that sounds a lot better than any of the pensions I can sign up to and I can always move into one of them and sell my main house if I need a huge cash boost.

mmm. you're likely to lose big time when you learn about demographics and arithmetic the hard way.

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I see those dread words 'average market performance' cropping up again in pension forecasting.

My brother has a 'frozen' pension plan with Standard Life.

In 2000 it contained £45K

In 2009 it contains £60K

That's what management charges and market 'volatility' do to pensions.

Save your money in ISA's. No risk, no parasites skimming your fund.

You'll be a lot better off, even on today's crap interest rates.

exactly, what timeperiod are they deciding to use for average 10,20,50,100,1000 years?

dj2p.jpg

The above really highlights just how little equities have actually fallen and just how far they may well fall, yet still give a decent return, the reality is the last 50+ years have been anything but average for UK/US equities, they have in fact been in the mother of all Bull Markets which has just started its bear market which could well last 20 to 30 years+

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We're not bothered about borrowing trillions from China to pay the bonuses and pensions of failed-bank executives. But, when it comes to properly rewarding the people that actually work for a living, we turn into a nation of opinionated Nazis. I don't get it.

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We're not bothered about borrowing trillions from China to pay the bonuses and pensions of failed-bank executives. But, when it comes to properly rewarding the people that actually work for a living, we turn into a nation of opinionated Nazis. I don't get it.

democratic_org_1.jpg

This is Britain. Same as it ever was.

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We're not bothered about borrowing trillions from China to pay the bonuses and pensions of failed-bank executives. But, when it comes to properly rewarding the people that actually work for a living, we turn into a nation of opinionated Nazis. I don't get it.

Brits are conditioned to fear and loathe one another. It's how the place is controlled.

I like the French. At least they kick ar5e when required.

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Brits are conditioned to fear and loathe one another. It's how the place is controlled.

I like the French. At least they kick ar5e when required.

I like the Italians. They have a natural distrust of authority. Only 50% of Italian income is declared to the tax man because they automatically assume their government is on the fiddle.

Italians demand three hour lunch beaks while the English demand the right to work 12 hour days until they're 140.

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Or build up your own profitable business, employ and train some honest loyal employees, look after them well and you can then live from the profit of your hard work and enterprise. ;)

I think you've come up with the perfect solution for every single person in the country!

Oh, hold on a minute... with everyone owning their own successful business, how are you going to find the honest local employees? They will be the ones who failed, and who will end up with no pensions. So it will be just like today - the same as it has been for generations.

Not that there's anything wrong with it, but don't hold it up as a universal solution :-)

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I heard took some Pension Advice from a 70 year old around 2 years ago and the advice is "gold plated". If you never read another post on Pensions, the listen to this. BTW I followed his advice.

Asumming you have 20 years left of work in you, until you want to retire. I myself am 34 years old.

I started this plan in 2007, around the time I joined this site.

Open an Savings Account with an interest rate of 3.5% (Mine is with the Nationwide).

Save £500 per month into a instant access savings account . Unlike a Pension, if you need it, you can always take it out. It works out at £125 per week.

Year 1 = £6000 interest of £210 = £6210

Year 2 = £12210 interest of £427.35 = £12637.35

Year 3 = £18637.35 interest of £632.30 = £19289.66

Year 4 = £25289.66 interest of £885.14 = £26174.80

Year 5 = £32174.80 interest of £1126.12 = £33300.91

Year 6 = £39300.91 interest of £1375.53 = £40676 .44

Year 7 = £46676.44 interest of £1633.67 = £48310.12

Year 8 = £54310.12 interest of £1900.85 = £53210.97

Year 9 = £62210.97 interest of £2177.37 = £64388.35

Year 10 =£70388.35 interest of £2463.59 = £72851.95

Year 11 = £78851.95 interest of £2759.81 = £81611.77

Year 12 = £87611.77 interest of £3066.41 = £90678.18

Year 13 = £96678.18 interest of £3383.73 = £100061.91

Year 14 = £106061.91 interest of £3712.17 =£109774.08

Year 15 = £115774.08 interest of £4052.09 = £119826.18

Year 16 = £125826.18 interest of £4403.19 = £130230.09

Year 17 = £136230.09 interest of £4768.053 = £140998.14

Year 18 = £146998.14 interest of £5144.93 = £152143.08

Year 19 = £158143.08 interest of £5535.00 = £163678.09

Final Year = £169678.09 interest of £5838.73 = £175616.82

So just by saving £125 a week for 20 year, with compound interest, you will receive interest payments of around £6000 from your savings each year without touching any of the original savings. This is also based on the interest rate being 3.5% net.

The earlier and longer you start saving for your retirement, the more you will accumulate. Remember unlike a pension, you can take money out at any time if you need it, but that will affect your interest. Thats why a modest £125 a week, so you dont over strech yourself.

Why give money to a fund manager, when you can keep it for yourself.

Retire when you want to, not when someone tells you too.

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I'm hoping to stay active and earning - albeit with more hols - until I die. What's the alternative, watching daytime TV? Total retirement without something useful to do sounds like Hell to me.

For me the problem isn't no retirement, it's that people do something miserable and unsatisfying through their lives, never mind when they're old. And that takes us off into debates about the channelling of people into dronelike existences.

Why else would the hope for so many be the termination of what they spend their lives doing, and the crisis is the death of that hope? How totally f*cking sad is that?

Couldn't agree more. As a part time locum GP / musical theatre writer I have two careers that I love. I'm only 34 now and things may look different in 30 years but I can hardly imagine wanting to retire from either of them.

I realise that I've been almost uniquely fortunate in the options life has made available to me, but there should be more debate in this country about how to make a satisfying life available to more people.

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