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The Spaniard

How Unfunded Pensions Will Destroy Your Retirement

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23 hours ago, dugsbody said:

You seem to know a reasonable amount about pensions. The part that is infuriating me is that I am in my prime earning years yet never benefitted from any of the things the older generation did. DB pensions, reasonable property prices, high interest rates while accruing deposit, high wage inflation.

When was the tax free private pension contribution introduced? Ie. The switch from DB schemes to DC?

I currently live very frugally because one of the few benefits I still have is a watered down tax free pension contribution, DC, not DB, which previously allowed higher contributions but now allows £40k. I've worked incredibly hard in London to finally be in a position to maximise this (but have to live frugally to do so) and they're going to remove one of the final benefits the working age "young" enjoy?

****** the UK generational inequality. ****** this policy. 

Also very high interest rates on mortgages at times, so it wasn't all a bed of roses

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as a millennial I can see that generation X will have the worst retirements of a good number of generations either way.

the boomers will generally be OK in retirement with gov support. but as they thin out there will be a huge wealth transfer and snap in generational wealth, where working will end up much more lucrative and pensions scaled back to poverty levels just in time for generation x to retire. The swing from lucrative to poverty ‘punishment’ retirement wealth levels, it will massively crush generation x. it will be sold as ‘making work worth it and revenge on the oldies’ generation x will pay for the previous generations greed. All aided by a nasty generation (millenials reaching middle age after being crush will be out for blood), who find the boomer vote (hand of god) suddenly having no vote as they shuffle off their mortal coils. 

by the time millennials retire, retirement won’t be as lucrative as it will be for the boomers, but snap back to a sustainable reasonable level than generation x gets, not dog food levels of generation x.

im not saying generation x will deserve the harsh snap back, not at all, they are the screwed sandwich generation. but they cannot expect a retirement anything like the boomers.

this will be achieved by excessive taxes, retribution taxes, etc etc, millennials will vote for tax regimes which only benefit themselves perhaps also making age discrimination legal in the process.

it’s sad that it will only fall apart when the boomers are all either 6 feet under or all gaga, but I guess life is not fair, as a millennial I can certainly attest to that!    

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4 hours ago, spacedin said:

Also very high interest rates on mortgages at times, so it wasn't all a bed of roses

I am not sure that is so relevant, high interest rates are not so much a problem - it is how much they have risen since buying that is a problem.

I calculated the difference between what I paid for my flat and later house compared to what I would have paid if prices had risen with inflation but interest rates had stayed them same.

IIRC The difference was £100 pcm more for the flat and £340 pcm more for the house until mortgage rates dropped at which point it was about £40pcm.

 

Sadly I can't work out how much lower interest rates have cost me with regards to my pension.

Edited by iamnumerate

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6 hours ago, Peter Hun said:

High interest rates means you don't pay the capital off, its all interest. This makes it much risker to interest rate rises because your loan balance stays very high for along time.

We have had over 10 years of very low interest rates, annual rate changes were the norm in the past.

I'd buy house today, back then I refused to do so because of the risk.

What’s the risk of buying a flat for say £40k when your earning £20k ? 
 

Your saying you think it’s less risk to buy the same flat for £300k when your earning £50k ?

 

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13 hours ago, GregBowman said:

What’s the risk of buying a flat for say £40k when your earning £20k ? 
 

Your saying you think it’s less risk to buy the same flat for £300k when your earning £50k ?

 

Surely no one really believe that.

Also if interest rates are 0.75 you are much more vulnerable to rates going than if they are 8% - because even a small move is a big increase.

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  • 316 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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