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to think that work should be worth it financially, and if not ....

(76 Posts)
HeyIJustMetYou Fri 12-Jul-13 18:42:41

then do what's best for you family given the perversity of the system.
Please note, not interested in benefit bashing - this is a real situation that someone I know is in. I'm much more fortunate.

We were discussing their situation yesterday. Married couple, expecting in London. She's planning on being stopping FT work, and being a SAHM, but will work freelance, he's got a full time job earning 50k.

Where they live, living on the one salary will be tight, but doable. It'll return about 35k per year after tax plus they will get Child benefit for the child of £20 per week. Rent alone will take around 40% of their annual income. They are fairly frugal people so can make it work.

However, we were discussing the entitled to site, which I suggested they had a look at. The calculator is fascinating so I thought I'd have a go. Turns out that if he reduces his hours too (to 16 hrs per week - though he would have to take a salary reduction more than pro rata to around 14k) and she works 8 (say as a cleaner earning herself a couple of grand a year) - they will be no worse off....

Huh? I couldn't believe it either.

Well, that's the way it is. They would be entitled to Working tax credit, child tax credit, Housing benefit, Council tax credit and child benefits which bring them back up exactly to the 35k income. Plus there would be all the additional benefits like free prescriptions, free school meals etc when the time came.

Their life would be an awful lot better too - as they both would dearly love to spend time with their child rather than working all the hours that the job requires, and with that work schedule it really would be a nice life.

They are not seriously considering this - but in many ways I think it would be the better life. Is that ridiculous? I'm posting this from an ivory tower, but quite a liberal one......

badguider Sat 13-Jul-13 10:50:05

I am self employed and when I go from 5days a week down to just 2.5days (and also during mat leave - 3mo of nothing, 2mo of just 0.5days a week) DH and I have agreed to keep paying the same amount into my pension as I did when fulltime. In reality that means HALF of my MA is going straight into my pension, but we can afford it if we tighten our belts so we're going to do it.

Also, as self-employed, nobody ever needs to know how many days a week I work. I have multiple clients and have never done more than 3 days a week for any one client (to spread the risk) so there will be no evidence on my cv of my new work-life balance.

[disclaimer: of course many people are not in as fortunate a position as me but again this thread started by talking about peple earning 30-50k a year rather than struggling on NMW]

janey68 Fri 12-Jul-13 23:05:06

Well that's great that it works for you, but it certainly doesn't apply to a large chunk of the population who have woefully inadequate pension provision (and this issue disproportionally affects women)
If it were that easy to work fewer hours and rack up really great investments which don't get hit by the problems in our economy then I suspect more people would be doing it!
As it is, most people would be wise to work to their potential to get the long term advantages, rather than working the minimum possible to gain the short term benefits

HeyIJustMetYou Fri 12-Jul-13 22:36:36

You might argue of course that I am working for myself doing so, but it doesn't take that much time and I can do it with a far clearer head than when I was stressed out by work.

HeyIJustMetYou Fri 12-Jul-13 22:34:50

Janey, whilst I agree with you in some senses (part time hitting your earnings), that is not true if you make smart use of the extra time. I manage my own pension (and investments) because I have the time to do it, and believe me, the returns I achieve are far, far in excess of what I would get it I worked full time and just put in the extra cash and let some financial parasite do it for me. My wealth is growing at a faster rate than full time - weird eh!

I appreciate that is not for everyone, but part time in my case has actually increased my long term financial security!

Portofino Fri 12-Jul-13 22:17:20

Sadly I am of an age where my pension is becoming all important. DH worked off shore for many a year then did a late degree. His wages are ok now, but he paid no NI for donkey years and started a career late so his occupational pension won't be all that either. He is 11 years older than me and will probably retire when dd reaches Uni age. This will all be on me. I am nagging him now that we need to downsize and learn to live on my wages alone.

janey68 Fri 12-Jul-13 21:53:45

Agree with portofino

I reduced to 3 days a week when our children were small, and stepped back up to full time once they started school.
Tbh it was quite a fluke that a full time post came up just then, and if it hadn't I might perhaps have carried on with 3 or perhaps 4 days a week, which is what a number of my friends have done, even when the children have grown into teenagers.
I didn't even consider the pension issue much at this stage- I was just excited by the full time opportunity. However, it's the best thing I could have done financially . Even just those few years of being part time have reduced my final pension significantly. It shocks me to think I could have been lulled into thinking I'd carry on working part time simply because we could afford it. IMO a lot of people are set for a really hard time financially in their later years. It's so easy to overlook these things though and just see a job in terms of the immediate money in your pocket

Portofino Fri 12-Jul-13 21:38:15

I would expect to be asked serious questions by potential employers if working one or two days a week. It would harm your career long term. And it would fuck seriously with your pension.

badguider Fri 12-Jul-13 20:38:30

Mumsyblouse - my point about the cv was about taking a lower pro-rata salary, not about doing less hours or earning less. I would make EXACTLY the same point to a mother as a father. By all means, reduce your hours if you can but if you reduce your salary in pro-rata terms you will find it hard to argue that you're worth your old rate per hour when employers can see your willing to work for so much less.

Somebody on a £50k salary working one day a week so earning £10k will be thought of more highly as more 'valuable' and 'more senior' than somebody on a £25k salary working two days a week and earning the same £10k.

Wishihadabs Fri 12-Jul-13 20:32:35

I suppose it's worth pointing out that we can only occupy this "sweet spot" because we both kept working through the lean pre-school years.

HeyIJustMetYou Fri 12-Jul-13 20:25:55

But, as we've covered ad infinitum on this thread, the state subsidises the company's pathetic salaries to such a degree that it has completely contorted the reasons to work 'hard'. And chandelina, we've also covered the future earning power argument. There is not nearly enough of that progression happening these days too. Optimism is a lovely thing, I'm all for it, but reality is not reflective of that in so many cases.

Yes I do blame.them. I work for money. To eat and drink and live. Because benefits are a stop.gap and intended to help when you're down. Working shouldn't be optional, and the way to resolving lazy attitudes that choose to work less because the state will pay is not to withdraw what the state is willing to give but IMO adjust peoples attitude to the reasons behind working and what benefits are there for.
The state lowering what they pay will leave people who need a safety net in poverty, which is wrong. It's the attitude that the 'state is wiling to pay' that I object to- they are not, they pay as a safety net in the hope that people will try to increase hours/get jobs etc when they are able. They do not pay to support a lifestyle choice.

chandellina Fri 12-Jul-13 20:16:50

Your scenario overlooks future earning power from pursuing a career, as well as the vulnerability of relying on benefits that can dry up at any time.

HeyIJustMetYou Fri 12-Jul-13 20:13:51

Good on you wishihadabs. 40-50k is hardly a lot these days when a family home costs such insane money. You are merely using the creative accounting that the corporate world and governments would use themselves.

If I was you, I would whack every bit of your salary you pay as higher rate tax into a pension too to get the tax relief if you can afford it.

HeyIJustMetYou Fri 12-Jul-13 20:11:10

Pregnantpause - no judgement - if work is valuable to you in an intangible way, that is fine. However as you yourself say, the job market is shit, and companies take advantage of that. It doesn't change the fact that people in effect are working for no reason if there is no career progression (and the state offers a scheme to subsidise that).

However, where someone places no intangible value on going to work, and whilst the state is prepared to fund it, if your work is soul destroying and looking after the kids is fulfilling, can you really blame someone for choosing the latter option? I wouldn't.

Wishihadabs Fri 12-Jul-13 20:09:42

I think if the government wants to make work pay they need to look at higher earners as well as lower earners

Wishihadabs Fri 12-Jul-13 20:07:40

I don't often post about this because I know it will make me generally unpopular. But just thought I'd point out there is another "sweet spot" that DH and I occupy

. We each earn between 40 and 50 K with deductions, pensions and expenses which mean we pay very little if any HRT.We need very little childcare (4 hours a week) because we both work a bit less than ft and the dcs are schoolage.We keep full child benefit too. If either of us did more work and earnt more we would see a tiny fraction ofit. I am not proud of this but the tax system makes this the reality for us.

HeyIJustMetYou Fri 12-Jul-13 20:06:22

In an ideal world mumsy, both would be sharing child care and earning equally. That is the best scenario.

I don't have a career type job- I work in a call centre, but still I think I'm better in work. Even if it's a shitty shitty job sometimes, last time the place I work advertised jobs there were 30 applicants per post. If an applicant had spent a period out of work, a significant period they would be less likely to come back to even call centre work than people who have continuous employment. Even shit jobs are competitive now.
On my team of ten people five are university graduates (including me). Jobs are scarce and I value the one I've got, and as I said earlier, to me, there are more benefits aside from financial gain.

HeyIJustMetYou Fri 12-Jul-13 20:04:55

She currently earns a lot less than him. if she had been the higher earner, I would have posed the situation in exactly the same way with the genders reversed without giving it a thought.

It is in no way shape or form a gender issue.

Mumsyblouse Fri 12-Jul-13 20:02:10

Yes, but the woman in the original scenario is giving up her FT presumably professional job for a few years anyway. Funny how when it is the man proposing that, the concern over the CV gap is very high, but thousands of women downsize or drop out of the job market every single year when they have children and I don't think so much thought is given to the damage to their CV's by doing this (or at least, they don't seem concerned about this in the original scenario).

HeyIJustMetYou Fri 12-Jul-13 19:57:32

Oh and buy 'beat them', I mean the government and industry, not the people who are the recipient's of state funded subsidies to corporations.

HeyIJustMetYou Fri 12-Jul-13 19:56:31

Agreed badguider - this is merely a provocative 'if you can't beat them join them' idea I thought of based on their circumstances. I'm not seriously condoning doing it.

badguider Fri 12-Jul-13 19:52:59

It may start voluntary but it will have a permanent impact in his cv.

HeyIJustMetYou Fri 12-Jul-13 19:50:09

The pro-rata was purely voluntary for the purposes of finding the benefit sweet spot. If he reduced to a 2 day week, his company would pay him 20k.

marriedinwhiteagain Fri 12-Jul-13 19:48:59

And the DH will become deskilled and there will be a detrimental impact on future pensions and death in service benefits etc. Might not be so easy to raise hours and maintain a career when the dC are a bit older; neither will it impart a sound work ethic for the DC.

This sort of thing makes my teeth itch.

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