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'wildly Optimistic' Over-45S Think They'll Be Worth £500K Come Retirement - And Only Half Of That Will Be Down To Owning A House

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http://www.dailymail.co.uk/money/pensions/article-2479092/Over-45s-think-theyll-worth-500k-come-retirement.html

Most Britons over the age of 45 expect they will retire sitting on assets worth almost half a million pounds, a study has found.

While there has been growing anxiety about the plight facing future retirees and their struggle to save for retirement, the majority of the 2,000 over-45s surveyed by Partnership appear to be bullish about their later life plans.

Nine in ten of them said that of the assets they hold, they estimate that their property will be worth less than 50 per cent of the total.

And how many will be willing to sell the said asset to fund their retirement?

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Or even fill up the car?

Retirees don't need cars.

Unless they've been stupid enough to buy a home in the sticks, which no doubt some will have thought was a good idea after watching 'escape to the country'

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To be fair the article did state that most people expected property to be 50% or less of their net worth. And 500K isn't exorbitant providing you have been in continuous mediocre employment throughout your working life, without windfalls from housing bubbles.

Last time I checked annuity rates were roughly £4K per £100K in the pot at 65. If you own a property outright and it is 50% of your net worth you are looking at a retirement pot of £250K. An 11K per year pension doesn't look that bad at todays prices to cover the essentials (heat, water, food and council tax....). If there is still a state pension by then or any of the allowances, that only further boosts your lifestyle.

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To be fair the article did state that most people expected property to be 50% or less of their net worth. And 500K isn't exorbitant providing you have been in continuous mediocre employment throughout your working life, without windfalls from housing bubbles.

Last time I checked annuity rates were roughly £4K per £100K in the pot at 65. If you own a property outright and it is 50% of your net worth you are looking at a retirement pot of £250K. An 11K per year pension doesn't look that bad at todays prices to cover the essentials (heat, water, food and council tax....). If there is still a state pension by then or any of the allowances, that only further boosts your lifestyle.

Assuming a 3% return (which seems reasonable in real terms ), £250k is £220 a month every month from age 20 to 65. Do you think most 45 year old have done that?

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Assuming a 3% return (which seems reasonable in real terms ), £250k is £220 a month every month from age 20 to 65. Do you think most 45 year old have done that?

I have no idea, most of the people in that generation that I work with are on final salary schemes, so will no doubt get a far better deal, for far less input. Quite a few also are now mortgage free and on substantially higher salaries than I am, so I would think a few of them if they had nothing saved for retirement at 45 (or even 60 in some cases!) would have enough disposable income to save 250K before they turned 65, if they wanted to.

We don't exactly have open access to anyones financial affairs in this country, so I can only really comment on my own situation. A 500k in a pension pot, let alone net worth in todays money at 65 looks quite achievable. Providing I don't have any particularly drastic life events, spells of unemployment or the government uses it to pay of the national debt.... I should probably factor some of these in to my retirement planning...

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A £250k house and £250k of savings at 65 seems reasonable for a decently paid professional.

However I don't see how somebody on average earnings could get anywhere near that so it cannot be "most", that must be real sample bias. Most people on average wages that I know in their 20s, 30s, 40s and even 50s have debts or minimal savings, homeowners or not. Some are admittedly spenders but even the prudent find it hard to put anything substantial away for a rainy day.

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I have no idea, most of the people in that generation that I work with are on final salary schemes, so will no doubt get a far better deal, for far less input. Quite a few also are now mortgage free and on substantially higher salaries than I am, so I would think a few of them if they had nothing saved for retirement at 45 (or even 60 in some cases!) would have enough disposable income to save 250K before they turned 65, if they wanted to.

We don't exactly have open access to anyones financial affairs in this country, so I can only really comment on my own situation. A 500k in a pension pot, let alone net worth in todays money at 65 looks quite achievable. Providing I don't have any particularly drastic life events, spells of unemployment or the government uses it to pay of the national debt.... I should probably factor some of these in to my retirement planning...

Your pension pot (unless you are final salary, index linked) is at the mercy of fund managers' sticky fingers and incompetence, and the volatility of the stock market.

A recent R4 radio programme (In The City?) found thirteen different sets of hands taking a cut from your contributions before they start earning for you.

Around 35% + of your fund will go absent this way.

Don't trust pension funds, just look at the top guys salaries/bonuses and the huge office blocks we bought for them.

Edited by juvenal

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A £250k house and £250k of savings at 65 seems reasonable for a decently paid professional.

However I don't see how somebody on average earnings could get anywhere near that so it cannot be "most", that must be real sample bias. Most people on average wages that I know in their 20s, 30s, 40s and even 50s have debts or minimal savings, homeowners or not. Some are admittedly spenders but even the prudent find it hard to put anything substantial away for a rainy day.

Just had my pension statement, and that's pretty much my territory, possible a bigger pension fund.

To put it into context, it would represent 20-25% of my current salary.

Add this to the standard pension (at age 68!), and assuming the house is paid off we'll have a reasonable retirement. Not a patch on my in-laws (FIL retired at 53 on a bigger pension that I'll get at 65, bigger house paid for by inflation..).

Disturbing thing is that my pension provisions are better than any of my peers that I know about..

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.....because older people have large amounts of debt still to repay, and as already mentioned family to support along with other commitments, it is not so much the amount accrued but the extra years of working required to reach any kind of position where they are in a position to retire......ideally older people should slowly wind down doing fewer hours rather than all then nothing, maybe on a training role......having so many more older people working only means certain posts are blocked for the up and coming generation who would benefit from moving into better positions....sometimes some older people are stuck in their own ways with set ways of thinking and doing things, not so flexible and adaptable, 'teach old dog new tricks' kind of ways..... ;)

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Just had my pension statement, and that's pretty much my territory, possible a bigger pension fund.

To put it into context, it would represent 20-25% of my current salary.

Add this to the standard pension (at age 68!), and assuming the house is paid off we'll have a reasonable retirement. Not a patch on my in-laws (FIL retired at 53 on a bigger pension that I'll get at 65, bigger house paid for by inflation..).

Disturbing thing is that my pension provisions are better than any of my peers that I know about..

IME (including payroll checking at a couple of big places) the younger a person is the less likely they are to have a pension. There are various reasons, typical ones are:

Don't need it because of parents' wealth

Can't afford the payroll deductions when finances are tight

Don't like the lack of control / trust it so have ISAs instead

There are obviously going to be some people who are live-for-today and avoid thinking about any provision, but these are a definite minority. For most it is an informed decision.

For pretty much all of these people auto-enrolment is a PITA and they will be opting out immediately.

There is an approaching glacier of people who will be entirely reliant upon state benefits on retirement at the same time as demographics mean that retired people are increasing relative to working people. It's not a pretty picture and the only fix is a further increase in the age at which you get a state pension and how long you have to work to get to it.

I've already seen 30 years NI contributions go up to 35 and age 65 go up to 67. It's going to move again before I get a penny of it.

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IME (including payroll checking at a couple of big places) the younger a person is the less likely they are to have a pension. There are various reasons, typical ones are:

Don't need it because of parents' wealth

Can't afford the payroll deductions when finances are tight

Don't like the lack of control / trust it so have ISAs instead

There are obviously going to be some people who are live-for-today and avoid thinking about any provision, but these are a definite minority. For most it is an informed decision.

For pretty much all of these people auto-enrolment is a PITA and they will be opting out immediately.

There is an approaching glacier of people who will be entirely reliant upon state benefits on retirement at the same time as demographics mean that retired people are increasing relative to working people. It's not a pretty picture and the only fix is a further increase in the age at which you get a state pension and how long you have to work to get to it.

I've already seen 30 years NI contributions go up to 35 and age 65 go up to 67. It's going to move again before I get a penny of it.

I am not banking on seeing any of it either, for any length of time anyway.....I might just collect enough to pay the funeral bill with. ;)

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Just had my pension statement, and that's pretty much my territory, possible a bigger pension fund.

To put it into context, it would represent 20-25% of my current salary.

Add this to the standard pension (at age 68!), and assuming the house is paid off we'll have a reasonable retirement. Not a patch on my in-laws (FIL retired at 53 on a bigger pension that I'll get at 65, bigger house paid for by inflation..).

Disturbing thing is that my pension provisions are better than any of my peers that I know about..

My uncle retired in the 70s aged only 36 (my age now :( ...).

His occupation...

a banker!!!

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Not a chance. My best guess is they've factored in some inheritance, a bit of housing inflation and some pixie dust.

Assuming a 3% return (which seems reasonable in real terms ), £250k is £220 a month every month from age 20 to 65. Do you think most 45 year old have done that?

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A £250k house and £250k of savings at 65 seems reasonable for a decently paid professional.

However I don't see how somebody on average earnings could get anywhere near that so it cannot be "most", that must be real sample bias. Most people on average wages that I know in their 20s, 30s, 40s and even 50s have debts or minimal savings, homeowners or not. Some are admittedly spenders but even the prudent find it hard to put anything substantial away for a rainy day.

The company is hawking an equity release product. Here's their press release for this 'research':

http://www.partnership.co.uk/press/2013/October/MOST-OVER-45S-EXPECT-TO-RETIRE-WITH-ALMOST-HALF-A--MILLION-IN-ASSETS/

I'm sure like me you can spot some teensy-weensy problems with their methodology (if you're charitable enough to call it that):

"When 2,000 over-45s people were asked if their property would make up more

than 50% of their assets when they retired, the overwhelming majority (89%)

said no. Given that the average property is worth £245,495, this suggests

that they expected to be worth a minimum of £490,990 when they retire."

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Not a chance. My best guess is they've factored in some inheritance, a bit of housing inflation and some pixie dust.

I overheard the other day someone saying they just got notification that their 'pixie dust' was due to pay them the grand sum of £42.50 a month. ;)

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The company is hawking an equity release product. Here's their press release for this 'research':

http://www.partnership.co.uk/press/2013/October/MOST-OVER-45S-EXPECT-TO-RETIRE-WITH-ALMOST-HALF-A--MILLION-IN-ASSETS/

I'm sure like me you can spot some teensy-weensy problems with their methodology (if you're charitable enough to call it that):

"When 2,000 over-45s people were asked if their property would make up more

than 50% of their assets when they retired, the overwhelming majority (89%)

said no. Given that the average property is worth £245,495, this suggests

that they expected to be worth a minimum of £490,990 when they retire."

:lol:

There's logic in there somewhere!

Good spot Mr Trader.

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Your pension pot (unless you are final salary, index linked) is at the mercy of fund managers' sticky fingers and incompetence, and the volatility of the stock market.

Don't trust pension funds, just look at the top guys salaries/bonuses and the huge office blocks we bought for them.

Agreed for most people, but we now have the choice to do it ourselves SIPPs. If you mess that up, there's only one person to blame. I like them and the concept very much - see the other thread I just started for a potential use I've just come across.... ;)

http://www.housepricecrash.co.uk/forum/index.php?showtopic=194360

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Or even fill up the car?

I bought a yorkie bar today the wrapper was an instant win promotion WIN A FULL TANK OF FUEL! you know things are getting desperate when a tank of fuel is considered a big prize!! (I didn't win lol)

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<br />Your pension pot (unless you are final salary, index linked) is at the mercy of fund managers' sticky fingers and incompetence,  and the volatility of the stock market.<br /><br />A recent R4 radio programme (<i>In The City?</i>) found thirteen different sets of hands taking a cut from your contributions before they start earning for <i>you</i>.<br /><br />Around 35% + of your fund will go absent this way. <br /><br />Don't trust pension funds, just look at the top guys salaries/bonuses and the huge office blocks we bought for them.<br />
<br /><br /><br />\\

I'd still rather have my own money in my own fund than have it in a black hole final salary pension fund where liabilities exceed assets.

There was an interesting court case recently which shows it could be hard for employees of foreign owned firms to apply to the pension protect fund for protection in the event of a the firm going bankrupt in it home nation, with the UK bankruptcy being seen as secondary event and the application to wind up the UK firm being made too late to qualify as bankruptcy under the terms of the PPF. So I think this whole final salary thing is a minefield.

The issue with fund charges is only an issue if your fund has high charges which should be obvious though there may be a cost to moving, though I appreciate there may be an issue with nested charges. My largest pension fund is from my time at a huge global multi-national and has a very low admin charges, something like 0.125%. My current employer scheme is higher about 0.25% and this is similar to my SIPP into which I consolidated my earlier funds (pre-2000).

In terms of the £500k thing (currently £500k fund might earn you £22.5k, but long run probably more like £30k) . I'd say I am fairly confident of hitting £500k, I already have £250k and currently have £1600 per month gross going into my current company scheme plus £350 net into a SIPP.

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They think they'll be retiring :lol:

Bless 'em.

Even if you have a big lump of capital to retire with deploying it in a way that generates an income to sustain you, for potentially several decades, is, as we're already finding out, getting to be very difficult.

I know people that did exceptionally well from annuities but, the later entrants stopped doing so well. Retirement provision in western economies is, and possibly always has been, a case of pick-a-ponzi with the most longevity.

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Well done Mike. I've always refused to pay top rate tax (VCT, SIPP contributions) but I begin to wonder whether I've been a mug paying ANY tax.

I'm in a final salary scheme (sorry) but I have a SIPP as well so I could start loading it. I reckon I can live on £10k a year, I think I'll try it.

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