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Call For A Living Pension £17500 A Year

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http://www.express.co.uk/news/retirement/484227/Pension-Retirement-17-500-Modest

And the amount needed to live a modest but comfortable retirement is put at £17,500 a year.

This would give them enough money to pay off any debts, run a car and be able to afford a two-week holiday in the summer, researchers for Barclays Bank found. Workers on the verge of retirement are not looking to swan off on round-the-world cruises, it says.

..

“This is why the concept of a living pension is so fundamental.

OK what's the maths behind the figure if every worker (couple) is to achieve £17500 how much per month do we have to save. I'm guessing that for someone on a average salary the savings needed would cripple there spending power now?

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http://www.express.co.uk/news/retirement/484227/Pension-Retirement-17-500-Modest

OK what's the maths behind the figure if every worker (couple) is to achieve £17500 how much per month do we have to save. I'm guessing that for someone on a average salary the savings needed would cripple there spending power now?

Hmmm ...

How many of pensioners are paying market rents or mortgages?

For those who own a house or have social housing, £17.5k/year looks like riches beyond what most could ever dream of. Champagne socialists or regular Toffs living in their bubble.

And to save up that much over a working life? Maybe £750/month would do that. Though if you're at the start of working life, you're in much more need of that £750 to pay the bloomin' rent!

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Hmmm ...

How many of pensioners are paying market rents or mortgages?

For those who own a house or have social housing, £17.5k/year looks like riches beyond what most could ever dream of. Champagne socialists or regular Toffs living in their bubble.

And to save up that much over a working life? Maybe £750/month would do that. Though if you're at the start of working life, you're in much more need of that £750 to pay the bloomin' rent!

Living in social housing now qualifies you as a toff now?

This forum has reached new levels of absurdity

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Living in social housing now qualifies you as a toff now?

This forum has reached new levels of absurdity

The people who have moved into the most recently let one have 2 brand new cars and he came back with golf clubs the other day..

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The people who have moved into the most recently let one have 2 brand new cars and he came back with golf clubs the other day..

Yes one of my neighbours has an SLK and she plays golf weekends. The horror of it!

Get on the list if you are so desperate for a council house! :lol:

Edited by aSecureTenant

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Living in social housing now qualifies you as a toff now?

This forum has reached new levels of absurdity

The toffs or champagne-quaffers are the ones who think £17.5k pension is normal, let alone minimal.

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Yes one of my neighbours has an SLK and she plays golf weekends. The horror of it!

Get on the list if you are so desperate for a council house! :lol:

Can you imagine - if we all had access to good quality cheap housing, people who worked hard would be able to buy nice things instead of spending everything on rent or mortgage for a hovel..

Civilization would collapse!

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Can you imagine - if we all had access to good quality cheap housing, people who worked hard would be able to buy nice things instead of spending everything on rent or mortgage for a hovel..

Civilization would collapse!

Is that the fault of the 'champagne social/toff tenants' though?

NO!

Posters like wonderpup have expressed this repeatedly far better than I can. People will always act in their own self interest, just like bankers. It obviously makes sense to get a Council property given the dire state of the private sector.

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Yes one of my neighbours has an SLK and she plays golf weekends. The horror of it!

Get on the list if you are so desperate for a council house! :lol:

just looked on Autotrader...used SLKs are cheap as chips.

golf courses abound.

not sure those criteria are so good for judging the personal wealth of a pensioner.

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Yes one of my neighbours has an SLK and she plays golf weekends. The horror of it!

Get on the list if you are so desperate for a council house! :lol:

How long do you expect to spend on that list? I've been there nine and a half years.

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http://www.express.co.uk/news/retirement/484227/Pension-Retirement-17-500-Modest

OK what's the maths behind the figure if every worker (couple) is to achieve £17500 how much per month do we have to save. I'm guessing that for someone on a average salary the savings needed would cripple there spending power now?

Based on the FT's best annuity rates, an individual who retired at 65 would need a pot of around £500k to get an RPI-linked pension of £17.5k (excluding the state pension). If the state pension is included in the £17.5k annual income target, they'd need a pot of around £330k.

http://www.ft.com/personal-finance/annuity-table

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Based on the FT's best annuity rates, an individual who retired at 65 would need a pot of around £500k to get an RPI-linked pension of £17.5k (excluding the state pension). If the state pension is included in the £17.5k annual income target, they'd need a pot of around £330k.

http://www.ft.com/personal-finance/annuity-table

Who gets the pot when they finally die?

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The trouble with increasing the state pension is that it is met by rolling back the retirement age a la the universal pension that will some time in the future hit 70.

Personally I would rather get less for longer. I think that would suit the hpcer profile with personal funds. A higher pension for less time probably would suit the indebted spendthrift.

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What I find interesting about this is that the current capital needed to achieve the £17,500 is probably about £400k. Now given most people seem to only have saved about £50 per month, I don't think they have any chance of hitting it.

I suspect these low interest rates will only last as long as they need to ensure the boomers can't take too much out of the system - if you have a lot of people retiring, it actually helps to have low interest rates as it means the annuities issued will cost less to service in the long term.

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I know people think I am lucky having a house mortgage paid off when I am 65. But I don't think I will be any better off than some one who rents. What is the government going to do through them out on the street or pay the rent for them?

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Who gets the pot when they finally die?

You don't need to buy an annuity. £500K yielding 4% should be enough to live on and not have to draw down the capital, so the 'pot' can be inherited. To get to £500K (inflation adjusted) though requires contributing £1000pm into an investment that yields 4% a year over that time. Many people will look at that and think they can leverage up on property and make that it half the time (based on guesswork and faith).

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Who gets the pot when they finally die?

If you buy an annuity, the annuity provider keeps it. Obviously, there are other alternatives if you want to pass it on to your (grand)kids - you could dump the pot into a private pension or some other tax-privileged savings vehicle, manage your investments yourself, and live off dividends/capital gains. You'd need about the same amount of money to get the desired income, though, unless you had an unhealthy appetite for risk.

These aren't unattainable sums - an average earner who saved 10% of their pre-tax income for 30 years or more would hit them fairly comfortably. Getting people to actually set aside that money, however, is not easy, even with all the incentives that are available.

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The people who have moved into the most recently let one have 2 brand new cars and he came back with golf clubs the other day..

There's this new invention called credit.

Stupid country's bail stupid banks to lend stupid people money.

I know folk living on £30 a week who sometimes get offered credit cards with limits 50-100 times that.

Tis a sick sick world.

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You don't need to buy an annuity. £500K yielding 4% should be enough to live on and not have to draw down the capital, so the 'pot' can be inherited. To get to £500K (inflation adjusted) though requires contributing £1000pm into an investment that yields 4% a year over that time. Many people will look at that and think they can leverage up on property and make that it half the time (based on guesswork and faith).

And to get 4% without risk to capital used to be doable.......now more like 2% in the era of zirp.

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If you buy an annuity, the annuity provider keeps it. Obviously, there are other alternatives if you want to pass it on to your (grand)kids - you could dump the pot into a private pension or some other tax-privileged savings vehicle, manage your investments yourself, and live off dividends/capital gains. You'd need about the same amount of money to get the desired income, though, unless you had an unhealthy appetite for risk.

These aren't unattainable sums - an average earner who saved 10% of their pre-tax income for 30 years or more would hit them fairly comfortably. Getting people to actually set aside that money, however, is not easy, even with all the incentives that are available.

That is interesting because from what I can gather my late father more or less lived off his annuities. His finances were setup so that if he had died first my mother would have been well provided for, but sadly she died first. When his estate was wound up their was no trace of any annuities or investments, just a house and small amount of cash (I'd assumed at the time, his pensions etc died with him). Living in France his estate was wound up by a local Notaire. One of lifes mysteries I guess.

Edited by aSecureTenant

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I think around £12.5k a year is easily enough for a decent retirement if there are no debts.Bankers are worried lots of people are heading to retirement with big debts.Banks cunning plan is to push for a bigger pension so that they can take their share still.

The best thing for people would be if the pension was £100 a week from around 62.It would be pretty easy for most people to build up enough income to take that to £12.5k.

The government though need to keep as many people working as possible and cover those who make no provision (and the massive working age benefit bill).They simply push out the age on the promise of an extra few quid.Its the reason they means tested ESA to one year.ESA was the perfect vehicle for people to retire a few years early.

Edited by durhamborn

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You're probably all going to laugh at me, but I am 39 and I consider myself 7/8ths retired.

I own my home outright, and have savings enough to last me probably two decades of comfortable but not luxury life for when my income drops to 0.

My current income is about 8k/year from two sources and I have a dandy time on it (not retirement funds, i do have a small occupational pension due age 65 [university Superannuation Scheme], and whatever remains of state pension which I have about 17yrs credit for so far.... not hoping for much there!.....)

I do things I've always wanted to pretty much every day, and I learn all the time.

I refuse to "feed the beast" any more, and try to avoid paying taxes as much as i can (legally, of course!)

ETA: I have followed a rule all my life to try not to exploit people, so I don't think I could ever be a BTL LL.

ETA2: I like that suffolk blog from VMR below! - I also believe less is more, and I don't consume much at all.

Edited by weaker

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I'm reading this blog at the moment.

http://simple-living-in-suffolk.co.uk/

It's basically one persons attempt to retire early and some of the financial lessons learnt along the way. Although called simple living, its not an eco-blog. I think the writer is an HPC'r. Keeping living costs far below income is a common theme.

In my case, I use salary sacrifice to put most 40% tax rate income (50-65% EMTR) into pension. This is enough to clear the mortgage with the lump sum at age 55. The rest of it will turn an existing outbuilding into a residential dwelling for income. I've also designed the house so part of it can also be let as an independent flat if required.

After age 55, working to pay so much tax is pointless so will drop to a 2 day week for another 5 years and then stop completely.

With no mortgage to pay, no 40% tax to pay and some extra income, I will basically have the same net income I have now. I currently live off <45% of gross income. If there was no mortgage, I can easily live off <30% gross.

I can't see how anyone paying today's house prices will ever have enough money to pay off the mortgage and be able to retire. Anyone with a low/normal income is stuffed. Anyone with a high income will be paying to support the low/normal income workers. Anyone with rentable assets and no debt gets to farm them all.

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