pensions

[Dodgy69]

As it stands at the moment for my age group, at 67 you currently get £179 a week each person if fully paid up on national insurance.

[slowsider]

As it stands at the moment for my age group, at 67 you currently get £179 a week each person if fully paid up on national insurance.

Less Coke and hookers, more Pepsi and coat hangers

[JackyJoll]

Final salary schemes have one HUGE advantage. If the pot is too small the employer has to pick up the tab. The market risk of the pot not performing well, or even shrinking stays with the employer, with a defined benefit scheme it is YOUR risk.

Defined benefit is final salary.

[Cousin Jack]

Final salary schemes have one HUGE advantage. If the pot is too small the employer has to pick up the tab. The market risk of the pot not performing well, or even shrinking stays with the employer, with a defined benefit scheme it is YOUR risk.

Defined benefit is final salary.

You are right of course. I should have said defined contribution

And now it won't let me edit it!

[wheelnut]

This is also why I think pensions are shit, you tie up 100k of your money and it gives you £17 a week back.
If you'd have put it somewhere else with the same compound growth then you'd have at least that amount to spend however you see fit, whenever you want - which you might have anyway if they'll just pay it out to you, but I suspect not.

I've looked at dropping a big sum of money into a pension now, but they really don't do you any favours, they still need to make money off it themselves and balance the risk of you living to be 100yrs old, so the return is crap, I'd rather just have the money in my account and worry about it running out before I die.

You could argue that if you start when you leave school then you don't notice the money drip feeding in, but if you took some time and drip fed the money somewhere else it would be a lot more flexible. Pension companies are out to make money, not help you.

You don't have to buy an annuity. You can use it as a tax advantageous long term savings account (which you can start to draw down when you're 55)

[Mr. Dazzle]

You don't have to buy an annuity. You can use it as a tax advantageous long term savings account (which you can start to draw down when you're 55)

You can also leave your lump sum invested in various funds and get dividend payments. If you have a large enough pension pot - and it doesn't have to be crazy big - you can get a comfortable 'salary' just from the 'interest' (not actually interest )

This is what my parents do - their pension funds provide them with a decent income just from dividends, they've actually ended 2021 better off than they started despite getting an income from their pension funds.

Certainly a man of your means Iccy could set it up that way.

[Count Steer]

You don't have to buy an annuity. You can use it as a tax advantageous long term savings account (which you can start to draw down when you're 55)

You can also leave your lump sum invested in various funds and get dividend payments. If you have a large enough pension pot - and it doesn't have to be crazy big - you can get a comfortable 'salary' just from the 'interest' (not actually interest )

This is what my parents do - their pension funds provide them with a decent income just from dividends, they've actually ended 2021 better off than they started despite getting an income from their pension funds.

Certainly a man of your means Iccy could set it up that way.

I sometimes think retirement arrangements are like electricity generation

You need something to cover the 'base load' ie average living costs - like a company pension+state pension.
Something to cover cyclical peak demand ie new cars, hols, home improvements like a SIPP or other investments.
Something to cope with unplanned spikes in demand ie new hip, boiler, roof repair - like savings, PBs etc
Then, in the final phase, you need to cover decommissioning costs - care home bills, funeral.

PS I have something like your parents have (which I haven't accessed yet). It has not gone up every year and can be quite bum clenching when the markets stoof. Long term it's always picked up again. (Which is what the lifestyle/glidepath is there to cover...you don't want to have to start drawing down in the middle of a market collapse if you are in growth stocks/funds).

Edit: but if you are putting money in regularly then your money buys shares cheaper when the markets do stoof, so the accumulation phase isn't the same as the draw down phase in quite a big way.

[Treadeager]

You don't have to buy an annuity. You can use it as a tax advantageous long term savings account (which you can start to draw down when you're 55)

Not absolutely sure , but I believe the government are modifying the age you can start to do this . It may be 57 or 58 by the time the dust settles ?

[Potter]

You can also leave your lump sum invested in various funds and get dividend payments. If you have a large enough pension pot - and it doesn't have to be crazy big - you can get a comfortable 'salary' just from the 'interest' (not actually interest )

Yeah the company IFA went through that, but I don't think you take the dividend, I think you draw down the capital and leave the dividend in there, the simple version IIRC was buy into a fund and let it grow, then when we retire we can draw down our capital gradually and leave the growth in there because we won't pay tax on drawing our capital out, hopefully the capital is enough to sustain us for many years and by that time the dividend will have filled in all or some of the hole that we're drawing down, ITMS.

So for the sake of numbers, you put in 500k, then let it grow for a few years, when you retire you can draw down your capital at say 20k a year, which will last for 25yrs, and all the while you're accumulating the dividend, which is taxable but even if it doesn't return the 4% annual drawdown it should still fill in the hole to a degree and so even if you average 3% growth the pot will hopefully last for another 15-20yrs, all the while still accruing growth, giving a pension of 20k for up to 45yrs or beyond - it's basically all about accumulation over years, although it's obviously more complicated than that and in the above I haven't added in inflation, potential loss of capital, etc.

That's a very simplified version, I can't remember all the details.

[Couchy]

You also have to remember the tax relief when investing which can’t be ignored.
There’s plenty of drawdown calculators on line and examples of interest rates to make some good examples of how as little as £200k can provide enough when used with the state pension. I say as little as £200k not ignoring it’s a lot of money

[Dodgy69]

Some might say, you could give up or reduce your working hours at 55 and use your personal or works pension to live on, making sure it last at least 12 years, then hopefully with no debt, live off the state pension.

For those coming up 55 and pissed off with full-time work it's food for thought.

[weeksy]

Some might say, you could give up or reduce your working hours at 55 and use your personal or works pension to live on, making sure it last at least 12 years, then hopefully with no debt, live off the state pension.

For those coming up 55 and pissed off with full-time work it's food for thought.

Yeah fortunately i'm not in the position that's an issue for me. Work is IT based and flexible too, so in reality it doesn't interfere with 'life' as much as it would for many people. I'm also in the position where i don't actually know what i'd do all day and i'm not planning on just sitting round getting fatter and plummeting into a spiral of daytime TV (which i watch enough of while working actually) and walking the dog i don't have.

I'm still thinking i'd like to retire for 60.... but i'll deffo need to come up with a plan as to what i'll be doing to pass time from there onward too.

But at 55 i do expect to take some money out and have a spectacular purchase... which is more likely to be van based than motorbike based admittedly.

[Mr. Dazzle]

spectacular purchase...van based

Most people do the cruise around the world or fly to NY on Concorde* thing but whatever floats your boat. I'm assuming you mean like a camper or something, but the idea just tickled me.

*Damned shame about that right?

[weeksy]

spectacular purchase...van based

Most people do the cruise around the world or fly to NY on Concord* thing but whatever floats your boat. I'm assuming you mean like a camper or something, but the idea just tickled me.

*Damned shame about that right?

The travelling thing doesn't massively do it for me, there's parts of the world i'd like to see, but i'm still hoping there's bigger fish to fry with the boy and racing. But if the world continues how i hope then it'll be something to support my lad for a summer/spring/year of racing Europe wide, so yeah camper based and carrying MTBs round Europe while he races and i enjoy, with @Welsh Muffin joining us but i'd expect using planes to meet while we drive places lol.
It's entirely possible that he'll end up quitting MTB and we don't race at all... in that case i have no bloody idea what i'll be buying/doing. Time as always will tell.

[Mr. Dazzle]

My big hope is that in 25 years time, when I've got this theoretical cash, space travel for ordinary people will be vaguely affordable.

[Dodgy69]

If you've got a motor/peddle bike/garden and enjoy a walk, there's always something to do, but for me it's reduced hours for now.

[weeksy]

If you've got a motor/peddle bike/garden and enjoy a walk, there's always something to do, but for me it's reduced hours for now.

Yes but it may become something you do just because you feel you ought to, or away from your missus etc... I want to do 'something' i enjoy and ideally as a family rather than just going out on a motorbike day in day out purely for the sake of it.
I have a few ideas on what i should or shouldn't do with my time but as to how realistic they are, i dunno yet.

[Count Steer]

Some might say, you could give up or reduce your working hours at 55 and use your personal or works pension to live on, making sure it last at least 12 years, then hopefully with no debt, live off the state pension.

State pension for most is £9300pa. Average Council tax is £1800. Energy and water bills £1500+? Car+fuel+insurance?

You'd really have to hate working if you want to live on what's left.

I suppose there are 'lotus-eaters' out there. Eat, drink and be merry for tomorrow we - eke out an existence for 30? years.

[Yorick]

If I'd waited until 66 to retire, I wouldn't be fit enough to be doing what I have been doing.
I'm having fun while I can.

[weeksy]

If I'd waited until 66 to retire, I wouldn't be fit enough to be doing what I have been doing.
I'm having fun while I can.

Yeah but you were in a position financially and had compatible ideas with mrs yorick, that's not necessarily the case for us all.

For me, i'd arugably head to Orgiva/Andalucia area and drink beer and ride bikes mostly... but Mrs Weeksy isn't interested in that, so it's very unlikely to happen.