State Pension

“If you make it to 65…” being the key factor here as many people will not make it to 65. That means for everyone who makes it and has 18-20yrs of retirement, there will be those that don’t even live long enough to retire or die within a few years. That is why it is important to use life expectancy at birth for the birth year when making state pension age decisions that will affect anyone not born this year, but born 20+ years ago.

Thanks @BabaBarrio that's depressing 😩

Life expectancy is very strongly correlated with wealth/socio economic status at a population level, but on an individual level there are plenty of outliers.

E.g. my great grandad grew up in a workhouse (orphan) and lived to 99.

What makes you say that? My grandad was a miner so my dad certainly wasn’t. He grew up during the depression too.

Whilst poverty can reduce life expectancy @NoisySnail its not necessarily the case at all.
Many poor people of the 30s/40s/50s living in abject poverty lived into their 80s.
Maybe it was all the porridge and cabbage they ate !

Meanwhile the richer eating too many heavy foods, meat and no veg a few centuries ago suffered and died from poor diets.

Now processed foods and lack of exercise are reducing life expectancy. Round and round and round we go!

At 67, both my parents are alive and kicking, and even in decent health, at 89 and 91, with their faculties and intellects intact. I'm not writing them off quite yet. Father's gp's both made 89, his mother the same age, and his father was 94. Mother's family are similar but not quite as long lived... about 85 on average.

@blossomtoes At a guess you come from a reasonably well off background?

My parents’ combined ages when they died was 196 so I’m hoping to get more than another five year! 😉

@blossomtoes My father, mother and in laws all died in their seventies.

Thanks 😂

Blossomtoes didn’t mention why your age expectancy goes up the older you get. It is because they don’t count everyone born the same year as you that has already died. It’s a survivor remaining life expectancy calculation.

The age expectancy calculation at age 70 removes everyone in your birth year that has already died younger than age 70. Your birth year group haven’t had their life expectancy go up from 72 to 88; it is to be interpreted to mean that as you have survived to age 70, you are far more likely to make it to 88- as in live longer than the average age expectancy at birth.

@blossomtoes Yes but it is a bit meaningless. Plenty of 70 year olds who will die within 5 years.

It isn’t true anyway. Life expectancy is age dependent. My life expectancy at birth was 72. I’m now 70 and it’s increased to 88. The older you get the higher it goes.

A pp mentioned that life expectancy now only applies to those born now. That means those born in the 1960s getting close to state pension age won’t have the life expectancy of now, but the life expectancy of 1960s which the low 70s I think?

The 5% draw downrule of thumb has been adjusted down to 2-3% due to the cycle of crashes we have had.

As I understand it the period of low interest rates after the 2008 crash is part of the reason for the housing bubble. Now we have some homeowners who have the worst of both worlds, they have paid an inflated price for their property and now that interest rates have shifted towards the historical average the debt has become unaffordable. It's no surprise they hope that 2% is the norm to which we will return.

Or asked to consider ‘assisted dying’ for our elderly parents and disabled children to cut NHS and social care costs?

This is only true for the Boomers and Millenials, all other generations are smaller, with Gen X being the smallest. As the Boomers die off, there will be a window of opportunity for the Government to abolish state pension or make it so meanly means tested it is de facto abolished and state pension is just UC for the elderly.

I agree, we've had a decade of unsustainable and historically low interest rates and it's very unlikely we'll see that again in our lifetimes. A range between 4-6% for the longer term is far more likely. But of course, in reality, that never happens either. It wouldn't surprise me if we continue see-sawing between high and low interest rates for the longer term as that is exactly what has happened in the past. There's always something which will crop up to mess up best laid plans!!

Few people will be planning on being bang at the limit. I only started mentioning the extra £5k allowance in response to someone up thread saying you pay tax on interest if your pension is £12.5 and you have more than £1k in interest which is wrong. The point is a lot of people WILL have state pension of around £12.5k and maybe a thousand or two in interest, so won't have to worry about paying tax, registering for self assessment etc. It's the entire reason why the £1k and £5k interest allowances were introduced several years ago, i.e. to stop people with modest savings having to register for SA returns and pay tax, i.e. to save the admin costs for HMRC of having to process it!!

I understand why people think the interest rates will return to 2%, but I don't think they will, 5% is the average interest rate and this is the mean to which we will regress.

....but if you go a penny over, you lose £5k of that savings relief in one go, no taper, nothing.

Poorer/those on low wages, simply do not have the means to save, they might put aside 50 or 100 per month and then have to dip into it to buy white goods, repair the car etc.
Which is why around 50% of the population have less than £1000 in savings.

Pensions don't need an expensive IFA, even to combine them, have the added adv that they have the employer contribution and cannot be touched until 55/57.

The current interest rates of around 4% won't last forever, likely as not will soon be around 2%, certainly with 12/24 months.

It may well be on Lewis’s website and the financial pages of newspapers but the vast majority of the population still wouldn’t know. The level of ignorance about finance at its most basic is massive.

Ease of access is as likely to be a deterrent as an attraction, I was very happy to have my money locked away where I couldn’t touch it, I was even happier not to pay tax on it when it was deducted from my salary.