To think we’re sitting in a pensions time bomb

[Iwanttobe8stoneagain]

I have been thinking more and more about my retirement I reckon I’ll have a pot (pension and other investments) equivalent to about £300k when I retire. But looking st what return I’ll get on this it’s about £11k year (plus whatever state pension still exists). My DH will prob have a little less. I thought we were doing quite well saving and certainly can’t afford any more. AIBU to be panicking over how we will be able to afford retirement and I suspect lots of people will have even less of a pot.

I have mixed feelings about this.

On one hand the state pension is not sustainable at its current level, which the government has been very quiet about. The retirement age is too young for a population who has been living longer and longer since it was initially set up and the current working population can not (should not!) be struggling to pay for the current pensioners. Of course the government know what a mess this is, but whoever chooses to confess to the mess will be out at the next election so no one is brave enough to come clean!

On the other hand we should not be relying solely on the state pension. We should be taking control of our pension savings and planning our retirement. If you want a retirement full of cruises and holidays then you should be saving for the luxury. I do not believe a retirement like that should be the norm.

My heart goes out to anyone who has been forced to rent their entire life, or who simply could not afford to save for retirement. That is shitty and I agree with a pp that suggested building small but cheap (to run/keep) flats so people aren’t stuck with high rental costs.

I don't mean to sound dramatic but I don't think it is really possible to save for retirement. I know people like to think they can, as it makes them less worried but even the aforementioned £500 a month? Say 35 years, £210k? How long will that keep you going for? Apply a basic time value of money calculation and it's far less anyway

What we really need to be thinking about is a 40,50 year retirement/ enforced retirement due to poor health, and or hundreds of thousands of pounds of care home fees.

When you realise a life time of sacrifice won't be enough at least you can just think fuck it

Agree. The combination of fewer people being able to buy property (and therefore have at least a roof over their heads in old age) plus rocketing rents making pension saving harder, is meaning a lot of people I know in their twenties /early thirties are just deciding to not think about old age because it feels so hopeless.

I have managed to buy, and, after years of ill health in my twenties, I know have a steady job and a few years of pension contributions under my belt. But I worry for my children, university debt + ridiculous house prices mean their future looks even more precarious. I am saving a bit for them but I suspect it will be a drop in the ocean.

Add to all the other woes the fact that life expectancy is increasing faster than healthy life expectancy, so what we're looking forward to is several years being kept alive with little quality of life and no control over our lives, and having to pay for the pleasure.

Yoga I agree top many people die suddenly having lived in penury with money in the bank

mere* which is a why all of us, now should be able fighting for assisted death or right to die.

How on earth is a 20 something now supposed to pay rent/mortgage, pay high travel costs, save for a pension? Potentially they might have uni debt to pay off as well & what happens once they want to start a family? On top of this we have wage stagnation.

I'm truly worried that this country is f*ucked. How is everything going to be funded? Not to mention the huge public sector pension deficit. Surely we as going to have to increase taxes but I can't see how the young can afford that.

Zevitevitchofcrimas "which is a why all of us, now should be able fighting for assisted death or right to die." Yes. And none of this nonsense about "if suffering from a terminal illness and likely to die within 6 months". I feel far more scared about living for 5 years in anguish than about living 6 months in anguish.

This is one of my big fascinations. I work in the field so am able to estimate things quite well.

Dh and I pay in huge proportions of our salaries into our pensions. (Me - 10% plus employer cont of 14%, dh - 21% plus employer comt of 3%). My parents never paid more than 5%except in my dad’s last few years before retirement. We both have significantly higher paid jobs than my parents did even at the height of their careers. I have already worked more years than my mum did and I have 30years to go to retirement.

But despite all this my parents have better pensions than we will. (My parents have the type of retirement most people dream of.) Luckily they are fully aware that they are lucky sods or I think I would not like them so much!

There are two positives that make pension go further than you would think:-

1. No NI conts.
2. No pension conts.

Obviously if you have paid of your mortgage off that makes a huge difference too but no help for those who rent.

Also I very much doubt we will see the massive house price growths in the future that some people have experienced over the last 30 years so you can't even rely on that.

Once I was priced out of housing (well, it's at a price I just simply cannot justify vs my salary) I decided I had to do something different.

I contribute 50% of my salary into my pension now + 6% employer contrib and also it's full salary sacrifice so I get my NI and the Employers NI. This means I get £1.13 into my pension for a 68p contribution now. If I was a higher rate tax payer, that would be costing me only 58p. Of course, this means the amount of tax i pay has dropped drastically.

I'm fortunate to have a reasonable salary and cheap rent....So come retirement I'll take my (hopefully 1m pension pot) if I invest it wisely, take the 25% in cash and travel the world, drawing down the rest of needed if I'm healthy.

If I'm not, I'll buy a place somewhere in the world and draw down.

It was the only thing I could do really, given the ticking clock and the way they propped up the housing market at the expense of saving. It's a real mess and not many can do what I do and it's this ridiculous head in the sand approach to running the economy of successive governments that has me acting like this!

zevite , yoga - agree, life should be a balance, I am shocked as much by those who live extremely frugally now, arrogantly confident they will definitely see in old age

Australia has compulsory superannuation (12 or maybe 15% now?) and has done for years and years. Not perfect and doesn't mean that there won't be problems in the future - but much better system. And means tested age pension. So much more a sense of needing to save and plan long term and in people's minds as a matter of course - built into salaries etc. System here needs a massive overhaul - but a real shift both practically and also the mentality. I think it is a shocking political failure (just one of OH SO MANY) that this is not being faced up to....

We rent. We can just about cover the rent and bills and feed ourselves doing odd jobs here and there and sometimes selling our possessions. There's not a pound left to save. Both university educated with student loans we haven't a hope of ever paying off. I'm terrified about our future.

I agree. I have an NHS pension and I’ve been in it 10 years eating £33k a year. It’s absolutely pants. My estimated retirement age according to the long term pension plan is 67 years old and at present my long term projection shows I will get roughly £7k a year. I’m meant to be be paying less national insurance than the those not on a government pension but at £260 a month it doesn’t seem like it.
I think they must want us to work ourselves to death before we can collect any benefits

Earning not bloody eating 🤣

Housing costs in many parts of the Uk are so horrendous, compared to many other countries , it’s no wonder people cannot save for a pension.

Illustrations on pensions are nonsense.

£300k in drawdown with a reasonable return would give around £15-£18k a year.

You can access pensions however you like now.

You need more income in the early years than the latter. People in their 80's don't spend as much.

Kids having to help out elderly parents is a fact of life now. Perhaps not in the world of MN where all old people are on massive pensions. A lot of older people aren't. Poster hoping for £40K a year pension. Good luck with that. Unless you are on a six figure salary and have worked for 40 years.

In has last year of uni my son and his mates lives in a massive old pub that had just been converted into student halls of residence type flats housing six or so people.

But some of the flats were rented by single working people on low incomes because they were relatively cheap (a room was £70 a week or so all in). I think this is the future to be honest, the government won't be paying out housing benefit on nice little one bedroom flats for pensioners: they'll be in cheap shared flats. Probably the ones that students no longer require once the uni bubble has burst. Not so bad if you're with your mates maybe, but a big come down for a lot of people.

I read an interesting piece which concluded that the retirement of the current 40-60 year olds who missed out on the gold plated pensions but lucked out on the property boom will be the end of that bubble (the property bubble).

Those retirees will need to find their retirement so will be keen to sell their properties thus reducing property prices for young people. Maybe..

bubbles. your math is wrong as it doesn't take into account that the money is invested and the returns compound over time.

It's been calculated that the average pensioner can live reasonably well on a pension of 20k a year. With state pension at 8k the average worker needs a private pension or 12k (which is a pot of around 300-400k depending on if you get the annuity liked to inflation).

That's putting aside 10 percent of gross income for the average worker which will feel like 6.5 percent for the average worker as contributions are free of tax. If your employer matches your contributions that figure could go down to feeling like as little as 3.25% of net income. That's doable but it's incredibly important to start as earlier as possible.

This situation is going to be hardest for renters and people who are single. I know plenty of well off people who only started saving in their late 30s because it's not really something most people are educated about and pushed to do as its a huge cultural shift.

No London girl I believe you have misunderstood where the thread was. That was referring to saving money, not investing in a pension (or in addition to)

LondonGirl are you saying people should aim for a pension pot of around 400k - and it's doable?

I won't earn that in my lifetime never mind being able to save that much !

Not many low paid or disabled people can afford to save 10% of their income.

I'm not sure if I've misunderstood your point (genuine question) but it is scary!

I've worked out I'll have a final pension pot of 12k - TO LAST MY WHOLE RETIREMENT !

I'd rather not bother to be honest - I'd rather blow it all on an amazing holiday with my then adult children and then say goodbye peacefully .

Who wants to slog all their lives for pittance and then just sit around doing nothing absolutely skint in old age ?!

I think we just need to get out of the mindset that we're going to have 20 years in retirement for the reason that it's financially unsustainable. Or just accept that if you want to live for 20 years without employment, you're going to have to sacrifice some of what you spend your money on now.

A long retirement is a dream not a right. In the same way that if you want to be a SAHM it's easier if you plan ahead, cut back and build up some savings to fund that. The problem is (and this is the pensions time bomb) that many people don't realise this until it's too late.