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To be genuinely worried about having to step over homeless people when I eventually retire?

(22 Posts)
chicaguapa Tue 02-Apr-13 21:32:36

The title is deliberately provocative to draw people in. But what I really mean is IABU to be genuinely worried that people aren't preparing for their retirement in 20/30 years' time and will have no income at all other than the state pension (if it still exists)?

There will be people working until 75 and then there'll be no jobs for the people leaving school/ university. I've lost count of how many people say they can't afford to pay 1% of their salary into the new compulsory workplace pension scheme, yet I wonder how they are going to afford to live on £100 per week. Not that 1% per annum over a working lifetime is going to reap a significant retirement income at all.

I'm not judging but just concerned that society is going to be in a worse position than now with the amount of people living below the poverty line. The government is trying to encourage retirement saving which is a clear message to say they're not going to prop up the future retired population, but with so many people living hand to mouth now, I'm not sure what the solution is. Especially when the media (and companies that don't want to give every employee a 1.5% pay rise) are reporting it as if it's a stealth tax. hmm

quoteunquote Wed 03-Apr-13 14:21:05

with so many people robbing peter to pay paul, just managing to keep their heads above water, it fairly impossible to save,

If everyone was paid a living wage then things would be different, but until people are paid a living wage, they will continue to just struggle.

Catchingmockingbirds Wed 03-Apr-13 14:29:32

Yanbu, I'm very aware that I need to start saving early for my future, but at the moment neither me nor DP are in a position to do that as we're barely managing to pay our bills every month never mind have money left over to save. In about two years we'll hopefully be able to start saving but I know so many that are in our position just now and I worry about what they'll do in the future.

amicissimma Wed 03-Apr-13 15:35:21

Because of the way compound interest works (although interest rates are low now) even quite small sums saved early (when, of course, you can least afford it) can add up to a reasonable sum over several decades.

I totally get that it's very hard for some people, but, OTOH, I have recently been told by a couple of people that they're ordering the new S4 at about £40 a month. Can't afford to put anything into a pension, though. Of course it's up to them, but a poverty-stricken old-age is not unavoidable for eveyone.

Madlizzy Wed 03-Apr-13 15:39:57

No money for pensions here. We pay out £12 more a month than we receive.

squeakytoy Wed 03-Apr-13 15:44:16

People who own property will have to sell up and downsize. Families will have to help each other out more like they did fifty years ago.

There will still be people who get money from family inheritance as they get older too.

janey68 Wed 03-Apr-13 15:49:43

YANBU.
It's not just a case of whether people can afford it; equally worrying are the number of people who are misinformed about pensions. The statistics show that it's predominantly women and a frightening percentage have really inadequate pension provision. I've even found, talking with intelligent and educated friends, that a scary number of women assume that things are ok because their husband has a good pension and they assume that if he dies first, they just keep receiving his pension in full until they die. It's been quite a shock to some that it doesn't work like that

I share your concern OP about state pensions, and am working on the basis that they won't exist by the time I retire, of if they do, will be woefully inadequate. We're living longer and hopefully many more of us will be in good health to enjoy our older age so Ive prioritised paying into pensions

CloudsAndTrees Wed 03-Apr-13 15:51:04

People can't afford to pay into a pension. Any money we can afford to save at the moment (which isn't often and it isn't a lot) goes into a fund for the children for when they want to go to university. I'd rather be a poor pensioner than allow my children to leave university with a ridiculous amount of debt meaning that they have no hope of being able to own their own property or be debt free.

My children being students is going to happen a lot sooner than me being a pensioner, so I'm prepared to take my chances. Which is good, as I don't have much choice.

GrowSomeCress Wed 03-Apr-13 15:51:33

Some people who are perfectly capable of saving for retirement don't bother, which is scary, and spend it all on drinks and clothes instead which is crap.

Feel sorry for those who can't afford to save though

hiddenhome Wed 03-Apr-13 15:54:35

Ha, ha, I spent 17 years paying into my private pension, but it's going to be worth virtually nothing by the time I retire, (I cancelled the payments last year) so I spend the monthly money on buying myself a little car to get myself to work now.

Sugarice Wed 03-Apr-13 15:57:03

We can't afford a pension although we have insurances if one of us dies or has a life threatening illness.

I don't want to get too old and suffer really terrible hardship.

Where's that wine! grin

CloudsAndTrees Wed 03-Apr-13 16:06:28

People who have saved for their retirement in the past have been penalised for it, which understandably makes others think it's not worth making the sacrifices now.

We now have a situation where someone who has saved their whole lives and gone without luxuries can end up with exactly the same care in exactly the same care home as someone else who had an equal income but chose to spend it as they earned it. Or they end up on a private pension with exactly the same income as someone on state pension and pension credit.

It's only worth saving if you are able to save enough to maintain a high standard of living. If you can't afford to save that much, I don't think there's a lot to be gained from the sacrifice tbh.

janey68 Wed 03-Apr-13 16:16:40

If you have a private pension, you still receive the state pension too cloudsandTrees.

I agree though that there have been ridiculous policies which have meant someone who has assets can end up having to sell them and fund care in the same care home as someone who is state funded. But there are big changes underway at the moment - I think the public have wised up to this and aren't prepared to play along any more. I think what we'll see in the future is a basic level of state provision but if people want an anything better than a basic existence, they'll have had to plan for it

GrowSomeCress Wed 03-Apr-13 16:16:57

That's not a good situation.

PostBellumBugsy Wed 03-Apr-13 16:23:09

I had some particular moment of foresight some 20 years ago when I first started to work and immediately started paying into a pension. I'm not sure what good it did me, as on the latest statement, I can expect to look forward to £55 per month once I reach 65 years of age!
I have various other small pensions that I've paid into over the years in different jobs & again they will all pay me peanuts. I've looked into transferring them, but you lose so much doing that, it is not worth it.
I've got a reasonable pension at my current place of work, but even if I stay here for the next 20 odd years until I'm 60 plus, although it will be better than a poke in the eye with a stick, I doubt it will keep me in Tesco Finest range!!!!!
So, we are all doomed. There will be so many of us asleep on the streets, you won't be able to step over us. shock

CloudsAndTrees Wed 03-Apr-13 16:24:35

I don't think that by the time I'm old people who have a private pension will get a state pension as well. I think the state pension will be basic, and only enough to live on. But I don't think Ill be able to save enough to provide myself with much more than that anyway, so I'm not prepared to make sacrifices for it now. I'd rather save for my children.

Don't get me wrong, I work in the public sector so some of my wages do go into a pension, but I'm only part time so it's next to nothing.

VerySmallSqueak Wed 03-Apr-13 16:30:38

Tread softly when the time comes as I reckon I'll be one of those you could be stepping on.

I have no provision for my retirement and didn't pay any NI contributions for many years.

All our earnings are needed for the here and now.

70isaLimitNotaTarget Wed 03-Apr-13 16:30:51

I work in the NHS- they used to be reknowned for their good pension package but in recent years they've changed:
contribute more; recieve less; work longer.

I don't dare think about pensions, I'll die in harness like poor Boxer in Animal Farm. (I will work harder) sad

Catchingmockingbirds Wed 03-Apr-13 16:45:52

What happens if you pay into a private pension through your work and the company then go bust? Do you still get your pension?

complexnumber Wed 03-Apr-13 17:23:11

I have been sort of budgeting on the assumption the White Cider will always be available in supermarkets at a ridiculously affordable price.

If not... then I am buggered and my children can... well... do something else.

PostBellumBugsy Wed 03-Apr-13 17:34:45

Catching - most company pension plans are run by pension companies, rather than the company itself. If the company goes bust, then the pension with the contributions paid into it, should still reside with the pension company.

chicaguapa Wed 03-Apr-13 18:45:39

Annuity rates are really high at the moment so the predictions that say your fund value will buy you a pension of 50p per week are based on those. Hopefully in 20 years' time you'll get more for your money as the rates will be better.

When £100,000 currently buys you a pension of approx. £4k per year, I still don't know what the downsizers and inheriting folk are going to live on. Based on current rates, my inheritance will buy me less than £15k pre tax which is significantly less than my income. I could put the money in the bank and draw down directly from it, but there'll be not inflation built into what I'm taking out and no guarantees that there'll still be enough to provide an income if I live to be 100.

Also our parents are more likely going to survive beyond our retirement ages so that leaves a gap between when we'll want to stop work and when we inherit. That's assuming of course our parents have anything left to inherit after nursing home fees etc.

Downsizers won't necessarily free up enough equity to provide a decent income in retirement. It's expected to cover a 20-year period, so that's a lot of capital needed to pay bills and buy food.

I've worked since I was 16 and have dreams about what DH and I will do in our retirement. We don't intend to be counting our pennies and living like students. We pay almost £500 a month into our pension schemes and I'd love to spend that on something else right now. But we are in the mindset that we are deferring some lifestyle choices for when we retire.

But I do worry about people that have no interest or ability to save for it now. The usual guidelines are that you start with half your age in contributions if you want to retire on a comparative income to your salary. So a 20-year would pay 10%, but leaving it until you're 40 would mean paying 20%. Of course this is a significant portion of your salary and many people don't have that spare or want to pay it.

I do think there's a significant chance that those who've saved for retirement will be shafted somehow and those that didn't/ couldn't will get handouts. But those on welfare will be a lot higher than now. And our children won't be able to support us as they'll still be paying off their uni costs.

It's a time bomb waiting to go off.

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