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.

olliegarchy - the key is in your own post - you clearly own your own home.

It is much harder for people to get on to the property ladder these days so they will have to add hundreds of pounds worth on rent on to them retirement outgoings.

I can't see anyone panicking "unnecessarily"

Ollie I think the point is that the modest but comfortable lifestyle you now enjoy on 12.5k per year is something that many of us, especially those in our 20s and 30s, do not see any realistic chance of having. It's not about cruises, it's about being able to stop work before we drop and have a realistic hope of having a roof, food and heating. Because there aren't enough of us compared to how many there are of you.

YY blinded. And the reality is that if someone is in their 70s and a homeowner, with sufficient equity to talk about using it to fund part of their retirement, part of the reason they're in a position to be able to do so is because the batshittery of the property 'market' in the past couple of generations has gifted them with a wodge of free money. This is not something that can continue indefinitely. For younger generations, even those who have managed to buy a home can't (or shouldn't!) realistically expect to be able to do the same.

Slightly off topic but with the increase in more elderly people using equity release, bank of mum & dad as the 7th biggest lender, children waiting for relatives too die plus massive social care costs do you think we will see mortgage terms increasing to 50 plus years?

Elisira there are some measures in place to limit how much high earners can put in their pensions tax free. If you earn more than 150k your max tax free contribution per annum is 10k. Before 2016 the limit was 40 so it's a big adjustment. 7 years ago I think wealthy people could stuff hundreds of thousand in a pension tax free every year. These changes as well as the recent reduction in the lifetime limit to 1 million value for a pension pot are all designed to address the issue

The worry I have really is that the age you can get the state pension is rising and jobs are getting increasing stressful. I can see a lot of people being excluded from the job market at 60 and no state pension til 67/69. I think the answer may we’ll be moving towards multigenerational living, young people can’t afford housing, old people struggling with pensions and health, childcare prohibitively expensive. Young people are already living with families for longer and longer will we see a time when they don’t move out at all? In which case the type of housing we are building should be adapted?

I don't have a pot of any description. I don't expect there will be a state pot after brexit, certainly not one when I retire. I'm not worried. I'll live as long as I can afford to live.

I agree we will see more multigenerational living which isn't necessarily a bad thing but they don't build family homes anymore so again it will depend on what your parents own.

I know it plays into the hands of the divide & conquer club but I'm getting increasingly frustrated as to why should i pay more taxes for a pension & NHS that i'm unlikely to receive. The burden has to fall on everyone.

Get sorted. I think more and more people are feeling this way - it’s the squeezed middle again. People in mid management professional jobs. Having to live in areas of higher house prices to commute to their jobs, paying high childcare/after school are/holiday clubs as live away from family, paying tax on their private medical cover meaning they never really use the nhs. Withdrawal of child allowance. They get no state help but seem to pay for the welfare state. Potentially school fees.By the time that’s all considered often they have not a lot of spare cash. It’s not unreasonable for them to expect some looking after and reasonable standard of living in old age and finally get something back out of the welfare state after years of thanklessly paying in.

I think far into the future, they'll legalise euthanasia....they won't tell us, but part of the reasoning will be financial.

It seems its a definitely an issue...I am 33 and only paid 4 years into a private pension. I came out of college with debt in 2009 and no job, so I had to get by and pile more deb until 2011 when I got my first real job. Then I just did contract work and when I got pregnant I knew I would not have maternity benefit, I stopped paying into my private pension to prepare myself. Husband has a good salary and it covers all the bills, but I found I still had to find freelance work when I just had my son to supplement his income. We are about to buy our first property with a good down payment thank god to some savings. But I don't see myself ever retiring and at the moment, I am doing all I can to make passive income which includes ebooks, building up a library of images on photosites etc. So if you are worried about your future, why not do something about it now? But also, when you hit 65-70 most people nowadays don't retire...they still work or in business...Its about changing one's mindset...We live in diff times, there is little value in looking what sort of pensions our parents or grandparents got or what their houses are worth now compared to then...

@LondonGirl83 - I know, but I don't think it goes far enough.

Rough figures - I earn £60K and can afford to live on £50K. I put £10K into a private pension and the tax relief makes it instantly adds £6785 (OK, that's based on £10125 from me)

But then I push my relevant earnings for Child Benefit below £50K so I get nearly £1K of CB.

So in case where I can afford to save £10K a year, I actually get nearly £18K!

Although as an individual of course I'm happy with this, I don't think it's fair, and that money would be better distributed to increase pensions of those on NMW.

iwanttobe8stoneagain - totally.

I was actually mulling over moving up North where finance/accountancy jobs are not paid too badly & buying somewhere either outright (with London equity) or with a tiny mortgage. Then we could use our wages for pensions, potentially schooling in the future &/or help the kids with fees/deposits. I'm a Londoner as is DH so we would be leaving behind all our family. If I feel like this in my 30s with property what does a 20 yr old feel like?

Getsorted - we’ll if you fancy a job in the Midlands we can split a referral fee and put it towards out pensions lol.

I expect people have always worried about how they will manage financially in old age, so concerns now are nothing new.

The thing is to start planning as soon as possible, because there is managing and having an enjoyable retirement with sufficient funds to enjoy nice holidays etc.

I did laugh though at whoever made the point that in ten years or so Comrade Crobyn could well be in charge, so we will all have tens of thousands each month won't we?!!

Susan I laughed at that too, mind you with comrade Corbyn in charge the country’s economy would have gone to pot so no one would have any money (except momentum) so at least we would all be equally as poor 😂

Quite true Iwanttobe !
The worrying thing is though, he has got a loyal following.

YANBU op, but it's not just the squeezed middle. People on lower than average but above minimum wage salaries are not getting any support either, the thresholds really are very low. So imagine the same costs as your middle management person except much less money. No significant pension savings here, can't get on the property ladder etc. But I don't think the solution is a US style system. It's no wonder we all feel resentful but why resent those who have even less than us, why not direct it towards decision makers and the super rich who seem to be doing very well while the rest of us are struggling.

OP, I've been nodding along with most of what you've said but I'm going to take issue with you including "potentially school fees" among the costs of this squeezed middle.

If you can afford schools fees - and even if you could, but they're becoming too tight, you are really not the squeezed middle!

I think people who haven't taken out a pension will get benefits to top up the state pension. So people who have paid in for years and have a modest private pension won't be any better off than them. It's more or less than situation now. Except people on Pension Credit can actually end up better off because of other help they get. nobody is living off the state pension and paying their own Council tax and rent. . It's impossible. IMHO.

Ellisandra personally I don’t agree with (or can afford) private schooling but I know some people very much in the squeezed middle that make this a priority and forgo a lot of things to make sure (usually with bursaries or scholarships) that their kids are educated this way. The squeezed middle is a wide range of people who get no help from the state but whose incomes are becoming less and less able to cope with the increasingly costly demands of providing for everything for themselves whilst paying their taxes to support everyone else.

Hmm, that may well describe squeezed but not necessarily middle. Similarly for a household where someone earns enough to lose any child benefit. That's not middle unless middle is very widely defined.

That's really not how I see a "squeezed middle".

To me, that's people who were earning enough to cover all their outgoings, and possibly some "nice to haves" in that - a week in Spain each summer, swimming lessons, a bit of a buffer in savings but not much, a car 5 years old not 10, no money to burn, but don't have to think twice when a friend asks them out for a birthday meal.

Then those people find that their income starts to go less far. Same income, but no pay rise or

*talking income level

I think another issue unique to our generation is the amount of assets tied up by the older generation as "inheritance"

My mum is a baby boomer who came from a council house. She is really proud that she will leave a house worth around £500k today (rightly so) and whatever is left of savings.

One day during similar conversation I said its lovely you think like that mum but you're 60 and I'm 37. You have 4 children. If you die at 90 I will be 67. I will have paid off my mortgage, thinking about drawing my pension and my children will Ben through uni and independent. What will I do with £100k then? I really needed it at 30, to help buy a house.

She seemed quite taken aback that it wasn't the life setting up money she expected and said ok well maybe it could help the grandchildren. Which would be really lovely. She already has 5. They will be in their late 30s and 40s when she's 90. I hope to god they're not waiting on your inheritance to buy a house.

It's almost like a power thing. I willl give you this gift....