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Dave Beans

'over-50S Suffer A Lifestyle Crash'

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http://www.dailymail.co.uk/news/article-1387832/Over-50s-suffer-lifestyle-crash-Millions-far-comfortable-year-ago.html

More than 60 per cent of Britons over the age of 50 say the quality of their lifestyle has ‘crashed’ over the past year, an alarming report reveals today.

It warns that millions of older people are being crippled by the combination of high cost of living, record petrol prices, tax increases and poor pay rises. The report, from old-age specialists Saga, paints a bleak picture of ever-increasing financial burdens forcing over-50s to make drastic cutbacks in their personal spending. Saga surveyed about 12,000 adults in this age group, asking about their lifestyle and how it has changed over the past 12 months. Dr Ros Altmann, director general of Saga, said their quality of life had ‘crashed again’.

‘Financial burdens for the over-50s have worsened with living costs soaring,’ she added.

‘We are witnessing a significant decline in discretionary spending. This has worrying implications for the whole economy.’

Over the past year, 61 per cent of older people said they had ‘cut back on non-essential spending’. This does not mean they are living on the breadline, but instead they have a lifestyle which is far less comfortable than it used to be a year ago.

Those polled said their cutbacks range from being forced to use their car less and buying fewer clothes, to cancelling holidays and never eating out. Other cutbacks include occasional treats such as a trip to the cinema or a haircut. But among the worst-hit, the survey found 15 per cent are having to reduce ‘essential’ spending, such as heating their home. Saga said one of the biggest nightmares for the over-50s is that the value of their hard-earned savings has collapsed as the Bank of England has kept the base rate at the historic low of 0.5 per cent, for more than two years.

This has been a saving grace for the millions of homeowners who have a variable-rate mortgage, but a disaster for savers who are earning rates as low as 0.01 per cent.

The reports also warns that this age group’s disposable incomes are ‘falling significantly’ amid tax rises such as the VAT hike and National Insurance.

The Office for National Statistics will today publish the latest inflation figures. Last month, inflation hit 4 per cent, which is double the Government’s target. The Bank of England has warned that it expects inflation to keep on rising, and could hit 5 per cent this year.

It comes as a separate report, from the insurance giant Prudential, today reveals how women are far more likely to face poverty in old age. Nearly 30 per cent of women do not have a penny invested in a company or private pension scheme, according to the report. By comparison, just 10 per cent of men are pension paupers with no money put aside for the future. Of those who expect to retire this year, men typically expect to get £19,400 a year, compared with only £12,900 a year for women.

Vince Smith-Hughes, head of business development at Prudential, urged young people to start saving, or risk a penny-pinching retirement. He said: ‘It is imperative for anyone looking to secure sufficient retirement income to start saving as much as they can, as early as they can. He added: ‘There are a number of actions that women can take to help to boost their retirement income. For example, it is a good idea to maintain pension contributions during any career breaks and to explore making voluntary National Insurance contributions after returning to work.’

The retirement income gender gap is at its widest in the South West of England where retired women expect to receive £11,700 a year less than men. Meanwhile in the South East of England the expected retirement incomes for men and women are essentially equal.

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http://www.dailymail.co.uk/news/article-1387832/Over-50s-suffer-lifestyle-crash-Millions-far-comfortable-year-ago.html

‘It is imperative for anyone looking to secure sufficient retirement income to start saving as much as they can, as early as they can."

The problem with this is that those that have put money into pensions have seen the growth reduced by the dividend tax grab and annuity rates bottoming out. There is zero incentive to save for a pension unless you are a higher rate tax payer and even then it is often only worth it if your employer makes a significant contribution.

Right now, saving in all forms seems to be a worthless activity. I think my generation just have to accept we will need to work until we drop.

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Boo hoo

How about this for a headline:

Under 50s to never have lifestyle of over 50s

or

Under 40s to never have lifestyle of over 40s

or

Under 30s to never have lifestyle of over 30s

and so on.

Spiralling into a western world of poverty. Grumble grumble...

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The problem with this is that those that have put money into pensions have seen the growth reduced by the dividend tax grab and annuity rates bottoming out. There is zero incentive to save for a pension unless you are a higher rate tax payer and even then it is often only worth it if your employer makes a significant contribution.

Right now, saving in all forms seems to be a worthless activity. I think my generation just have to accept we will need to work until we drop.

You need £100k in a pension pot to get a £6k a year income that dies with you.

Alternatively you can save £20k for a 10% deposit on a BTL which will probably generate you a £10k a year income and you'll be able to pass on to your children or sell off for a large cash sum.

*waits for Si1 to explode* :)

Edited by Timak

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You need £100k in a pension pot to get a £6k a year income that dies with you.

Alternatively you can save £20k for a 10% deposit on a BTL which will probably generate you a £10k a year income and you'll be able to pass on to your children or sell off for a large cash sum.

*waits for Si1 to explode* :)

Capital depreciation conveniently forgotten :rolleyes:.

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Another thing that this article fails to realise is that all of the problems they raise are being felt by all age groups, not just the over 50s.

Terrible journalism.

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No wonder they scream when one of their largest (perceived) sources of wealth is going down in price every month.

No mention in the article about the amount of money they are having to hand out to kids to get them out of the family property and into one of their own.

No govt bailout for the BoMaD BTW!

Edited by rantnrave

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Capital depreciation conveniently forgotten :rolleyes:.

If I buy the house for £200k and generate £10k in rent which covers the £190k mortgage then in 25 years time if it is only worth £150k then I've still got a £150k asset for £10k down.

It is the only leveraged investment available to joe-public so remains a sensible choice.

*disclaimer - I own no BTL properties*

Edited by Timak

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You need £100k in a pension pot to get a £6k a year income that dies with you.

Alternatively you can save £20k for a 10% deposit on a BTL which will probably generate you a £10k a year income and you'll be able to pass on to your children or sell off for a large cash sum.

*waits for Si1 to explode* :)

fair enough

fiber1.jpg

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If I buy the house for £200k and generate £10k in rent which covers the £190k mortgage then in 25 years time if it is only worth £150k then I've still got a £150k asset for £10k down.

It is the only leveraged investment available to joe-public so remains a sensible choice.

also has tax advantages, and of course has a habit of being really cyclical

just on the yields, 10k in rent needs a house value of roughly £150k to make it a viable yield in investment terms compared to llong term stocks yields, and at points in the cycle it can probably go cheaper still, which would be the best time to do leverage (edit - 150k would be too expensive for my liking frankly, but this is the price at which I wouldn't necessarily think it was a suicidal financial move)

one advantage of previous decades has been the tax laws favouring small/private landlords over large corporate landlords, but steps are in place to reverse this, from previous and current govt, which may make it very hard to compete with economies of scale of large landlords like Aviva who may be getting into the market

(edit: of course pensions do have the drawbacks you say, but you only have to take the annuity at 75 and can take 25% out tax free much earlier and invest for income elsewhere, even in property, and then take a drawdown until 75 straight into other income producing funds, before being forced to take annuity at 75, and even then it would make sense, depending on the figures, to take a non-index linked annuity and save up all the early excess cash into other income-producing non pension investments; then again the rules may change again!)

Edited by Si1

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If I buy the house for £200k and generate £10k in rent which covers the £190k mortgage then in 25 years time if it is only worth £150k then I've still got a £150k asset for £10k down.

It is the only leveraged investment available to joe-public so remains a sensible choice.

*disclaimer - I own no BTL properties*

Not quite true though. Buying shares in a company effectively gives one leverage as the company itself has leverage. For as long as their returns exceed their debt service costs, the effect on the corporate balance sheet is similar to buying a BTL by an individual.

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Capital depreciation conveniently forgotten :rolleyes:.

OK, but capital depreciation from an annuity once you cark it is 100%.

Whatever anyone feels about BTLs, the fact is that whatever happens to paper values, a dwelling is still a physical, income-producing asset you can pass on.

With the compulsion to buy an annuity coming to an end (or has it already?) quite frankly I can only see more people going down the BTL route. Why would anyone but the most cautious (or people with nobody to pass anything on to) choose to put a large chunk of cash into a scheme producing a relatively pitiful income, and have that money die with you?

Like it or not, and I know many on here don't.

I have no BTLs, BTW.

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OK, but capital depreciation from an annuity once you cark it is 100%.

Whatever anyone feels about BTLs, the fact is that whatever happens to paper values, a dwelling is still a physical, income-producing asset you can pass on.

With the compulsion to buy an annuity coming to an end (or has it already?) quite frankly I can only see more people going down the BTL route. Why would anyone but the most cautious (or people with nobody to pass anything on to) choose to put a large chunk of cash into a scheme producing a relatively pitiful income, and have that money die with you?

Like it or not, and I know many on here don't.

I have no BTLs, BTW.

you speak as if BTL is the only income producing asset available??

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OK, but capital depreciation from an annuity once you cark it is 100%.

Whatever anyone feels about BTLs, the fact is that whatever happens to paper values, a dwelling is still a physical, income-producing asset you can pass on.

With the compulsion to buy an annuity coming to an end (or has it already?) quite frankly I can only see more people going down the BTL route. Why would anyone but the most cautious (or people with nobody to pass anything on to) choose to put a large chunk of cash into a scheme producing a relatively pitiful income, and have that money die with you?

Like it or not, and I know many on here don't.

I have no BTLs, BTW.

I can see why people would choose BTL , the same way that i can see why everyone was taking out endowments in the 90s (property was dead, stocks only go up)

To make an investment in anything you have to try to work out what will happen in the future, knowing the tax, legal regulations and performance yesterday and today is pretty pointless when trying to assess future performance, but like you say, nearly everyone does it

Edited by georgia o'keeffe

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You need £100k in a pension pot to get a £6k a year income that dies with you.

Alternatively you can save £20k for a 10% deposit on a BTL which will probably generate you a £10k a year income and you'll be able to pass on to your children or sell off for a large cash sum.

*waits for Si1 to explode* :)

25 year mortgage, IO on £180k? That'll be £900 a month or £10,800 per year.

You'd need to be renting it out for a minimum of £20800 to make your 10k "income".

£1800 / month rent for a £200k property? Not these days.

Not a great pension plan.

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25 year mortgage, IO on £180k? That'll be £900 a month or £10,800 per year.

You'd need to be renting it out for a minimum of £20800 to make your 10k "income".

£1800 / month rent for a £200k property? Not these days.

Not a great pension plan.

Ah, some flesh on the VI bones.

not forgetting replacement this, void that insurance the other.

Oh, and the repayment vehicle....

Of course the advantage is that your interest is paid PRE TAX, whereas the OO they are wanting to price out is paying interest and repayments POST TAX.

See, BTL is bad for Government tax take too.

Dont know why they dont change the rules.

Edited by Bloo Loo

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Guest eight

you speak as if BTL is the only income producing asset available??

For 99.9% of the population it is though.

Thing is, until recently cash in the bank was considered an income producing asset; ok maybe not in the very long term vs. inflation, but not as bad as at present when, no matter how minted you are, you feel like you can see your stash diminishing almost before your eyes.

So if you need to get out of cash and into something else, what tangible asset does the ordinary Joe actually understand and feel comfortable with? Add in a healthy daily dose of Homes Under the Hammer and the outcome shouldn't be a surprise to anybody.

eight

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Ah, some flesh on the VI bones.

not forgetting replacement this, void that insurance the other.

Oh, and the repayment vehicle....

Of course the advantage is that your interest is paid PRE TAX, whereas the OO they are wanting to price out is paying interest and repayments POST TAX.

See, BTL is bad for Government tax take too.

Dont know why they dont change the rules.

but OOs don't pay capital gains tax

don't know how much one balance the other

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For 99.9% of the population it is though.

Thing is, until recently cash in the bank was considered an income producing asset; ok maybe not in the very long term vs. inflation, but not as bad as at present when, no matter how minted you are, you feel like you can see your stash diminishing almost before your eyes.

So if you need to get out of cash and into something else, what tangible asset does the ordinary Joe actually understand and feel comfortable with? Add in a healthy daily dose of Homes Under the Hammer and the outcome shouldn't be a surprise to anybody.

eight

average Joe does not understand poroprty, but may think he does, and feel comfortable with this, but this is cyclical and will be the opposite when his mate down the pub loses his family home due to his BTLs

so I agree, except to say that this is cyclical and temporary

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but OOs don't pay capital gains tax

don't know how much one balance the other

but "Affordabilty" is not in the CGT equation.

To buy a house, the poster said it costs x, and you make y, which is rent minus x.

Nowhere is CGT included here...its all down to todays costs of borrowing.

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but "Affordabilty" is not in the CGT equation.

To buy a house, the poster said it costs x, and you make y, which is rent minus x.

Nowhere is CGT included here...its all down to todays costs of borrowing.

from a bubble-blowing perspective, yes

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Guest eight

average Joe does not understand poroprty, but may think he does, and feel comfortable with this, but this is cyclical and will be the opposite when his mate down the pub loses his family home due to his BTLs

so I agree, except to say that this is cyclical and temporary

I know some pretty "ordinary" people who have jumped feet first into property speculation though. I just can't see them being as enthusiastic about PM's/shares/intangibles, nor do I think the will have the understanding or mechanisms for investing in these asset classes.

Plus of course they won't get bank funding.

So property definitely has that "X factor" as far as the proles are concerned.

eight

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I know some pretty "ordinary" people who have jumped feet first into property speculation though. I just can't see them being as enthusiastic about PM's/shares/intangibles, nor do I think the will have the understanding or mechanisms for investing in these asset classes.

Plus of course they won't get bank funding.

So property definitely has that "X factor" as far as the proles are concerned.

eight

yes, but are you denying that it has strong cyclical tendencies?

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Guest eight

yes, but are you denying that it has strong cyclical tendencies?

Historically. But I think it might have fallen off. Only show in town and all that.

eight

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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