To think that a lot of us will be in trouble when we retire...

[Fleetheart]

This generation seems very unlike the previous ones in that we take out loans for everything, buy holidays on credit, kitchens on credit, new clothes etc etc. And pension schemes are getting less and less generous. And most of us don’t understand them anyway. I’ve always earned well, but have split up from partner, so still have s lot on my mortgage, no savings, and really not very much in my random pension schemes most of which are money purchase schemes and won’t pay a lot. And I know many people of my age (mid 50s) who have no pension at all. And meanwhile the govt is being less and less generous. What will become of us all?

Cedar I think a lot of people don't plan full stop. Or cant afford to.

Plenty of people live week to week, so putting big purchases on credit is all they can do if it's something important like a cooker or similar (if they qualify and are able to pay it off). We borrow nothing because we would definitely be told to "sling yer hook" if we tried to. We have to save for everything that breaks.

Pension days are far from a priority when you have fuck all left after bills and budgeting your tits off just to afford cheap food, essential medicines and a couple of bog rolls. That's us.

I figure that financial stress will kill me before I ever get anywhere near pension age. It's doing a pretty bang up job of edging me towards the inevitable already. If the stress just so happens not to get me, my back up plan will get me there instead. Yes, my pension plan is to...well, you can guess that, I'm sure.

I spend my life pretty much in terror of something bad happening to DH or him losing his shitty job that just about keeps a roof over our head and just about stops us starving to death because I am well aware there are only meagre benefits (if you can bow and scrape enough, jump through enough hoops and manage to keep jumping through them so you don't get sanctioned by a snotty office worker who thinks you are a piece of utterly despicable shit). There is no safety net...not for genuine claiments in genuine need...not really.

I’m 26 and work for the civil service. My pension contributions (5.45%) are taken automatically so I don’t have a choice in the matter. Even if it became optional I’d still pay into it though!

@Polly111 I fear you’re right. We’ve been sensible with our money. At the tail end of the recession where we are, rents were relatively cheap (the rent for our old apartment has almost doubled). Our friends were going on multiple trips a year, cars on finance, new phone upgrades each year, lots of nights out etc, extravagant weddings, kids parties etc. We didn’t go on a honeymoon, no holidays for 4 years, same cars and phones for five years (and we paid cash for our cars). Our only extravagance was my university fees as I did an undergrad part time, and currently finishing my masters so I can get promoted. They’re giving out about rents and now claiming rent allowances, we brought a home and our mortgage is less than our rent was in 2011. We intend to purchase two BTLs abroad in DHs native country early next year. We’ll have three mortgage free properties, two private pension pots (for annuities) and expect that we’ll be penalised for thinking of the future and not being wasteful. It’s not fair.

Most people have chosen to spend today rather than to save for the future. The myth that you will end up in the same care home as the person who saved nothing is heard frequently - we seem to forget the 20 odd years before we get to that point.
But it's those in their 20s/30s/40s who are most screwed - no final pension, less equity in their property etc.

I was one of the last to get final salary pension when I rejoined my company, I'm 45. I've taken 10 yrs of part time employment so I will still need to either increase my contributions or work there for longer if they still want me! I'll look at the contribution increase when other areas settle down. I don't have a mortgage so am luckier than many but I'm still concerned about retirement affordability

"I assume retirement will be funded for most by property rising in value."

Yes, what is interesting is how it will work once we return to a situation in which most people don't own their own homes - the proportion of owner occupiers is falling amongst the younger generations. In the past life expectancy was much lower so the question of how to fund pensioners' rents was perhaps less pressing.

Yes to the pp who says ability to work to 68 is not guaranteed - physical and cognitive ability. Some 68 year olds are in fine fettle, others are not.

Let's face it, many (most?) women in their 70s and 80s didn't work, or if they did, they were part-time.

Err - yes, they did. Are you sure you weren't thinking of the 50's/60's.

My mother worked full time in the 70s/80s and in all the firms (4 different ones) I worked at in the 70s/80s, there were plenty of full time women employees. Nearly all my friends (currently in their 50s/60s were full time back then and are now still working part time and most unlikely to fully retire until state pension age.

I actually think more women are working part time now than they did in the 70s/80s - I hardly know any middle/aged women today who are full time - it's just not the done thing anymore - especially now that lots of employers are more amenable to "work/life" balance.

@NameChangerAmI you need to pay national insurance for 35 years to get a full pension. You get NI credits if you are in receipt of benefits. It's not related to how much you worked or how much you are paid, just that you made NI contributions each year.

I was shocked that you said you were in your 50s - I was expecting you to be in you 30s from your comments. I am late 50s, so your generation and I don't buy anything on credit (apart from the obvious stuff like car and house). We paid off our mortgage years ago and live well within our means. However I get what you are saying about pensions - but if there are no 'old age pensions' from the government pensioners will have to claim something like UC or similar - they can't just expect you to have nothing to live on - but it will be an existence and not much of a life. Of course many of our generation will inherit from our parents, so that will tide many over.

One of the problems is that in order to retire in anything approaching comfort, you have to start saving early into a private pension.

So, let's imagine that you start working at 21 and retire at 65. (For ease, 45 years.)

If you begin saving when you begin to work, just at £50 a month, and then increase your contributions 10% a year and put it into a decent plan that returns 8% a year, you'll retire with a £1.3 million pension pot, or about £66k clear without touching the principal.

If you start at 40 at £50/month, and do the same thing, you'll save just over £129k.

Even if you start with a higher contribution, it won't help as much: if you start saving at 40 at £200 a month, and do the same thing, you'll retire with a pension plan of £516k, or just shy of £26k not touching principal.

All of which is to say, starting to save for retirement early makes absolutely all the difference, assuming the world hasn't, you know, totally collapsed into chaos. It's never too late to start, but retirement savings in your 20s really, really matter if you're going to try to retire as early as 65.

I wish this was drummed into heads in school. It's really not sexy, and there are so many loans out there, but even a little savings now can have such huge dividends down the line.

(Obviously, this whole thing is an enormous shame and terrifying for those who can't put £50 away and part of the larger unfair system, but. Still.)

I agree, but our generation is inheriting more, plus we will find new ways to live. My friend has suggested that we could share a place together for instance (I'm separated and her relationship is floundering). More people are single in their old age but I know those who live with family, even with ex partners as room mates!

To be honest, I want to live healthily then pop off, I don't want to fade away as I saw my grandparents and friends parents.

Yeah, When I saw no pension at all I am assuming some will get the state pension. But £6000 is not a lot to survive on, especially if there is rent to pay. My workplace pension has an employers measly contribution of 2% of salary. I guess I really need to increase my own contributions.

I've no pension (self employed) but I will have paid off my house by 60. Will work til 62 and then DH will retire and I will live off his teachers pension.

I would have no problem living on the state pension if there are two of us with the mortgage paid off - it's over £1200 a month! Even without any private pension.

Our outgoings will drastically reduce - get rid of car, free travel in London, no commuting costs.

We're doing OK - but DP describes it as poor well-off - ie. because we were raised poor, it doesn't occur to us to spend a lot of money, even if we have it. As a result, our house is paid off and we're on track for getting another free and clear which will be our pension pot.

We don't have an official pension (well, we both do, but from first jobs, so with virtually nothing in) because by my sums, it was better to pay down the mortgage and buy another property which we could sell in an emergency, than lock money away in a pension.

By my sums, we could retire next week if we were to live very frugally, but given we want to be able to help out the kids etc. we'll stick at it for another 10 years or so, so we have a comfortable cushion for Uni fees etc.

We are lucky though, as well as easily pleased by shopping at TK Maxx and camping holidays, rather than new cars, designer gear, and the Caribbean.

I agree with you.
We are ok I hope, we are both in career average pension schemes which are projected to pay out about 2/3 of our income. We will pay off our mortgage several years maybe even a decade before retirement so will hopefully be able to make additional payments.
I assume that we will not have state pensions by the time we retire, on current rates we would actually have more money in retirement than now if we had both.
DH also pays into a private pension that projects a pension income of c£700. I can totally see how people will struggle (and I don't rule us out of that as no pension scheme is bullet proof) .

To be clear, I don’t buy lots on credit, I have an old car etc etc, but a lot of people I know do! And they spend spend spend rather than save, and I do think that rather than my parents generation (where they actively saved), our generation and younger don’t have the same ethos of saving. That’s a generalisation of course, there are plenty that do- but there are a lot who definitely don’t!

Another thing to consider is putting your home in your adult children's names (once theybhave their own homes too). This way should avoid inheritance tax if you die after 7 years of doing it

I'm 35 with two pensions and an investment property which I deliberately bought when I divorced for when I retire - no idea with all the hideous taxes etc if I will own it for the long but the capital is there if needed as a lump sum.
I'm still very worried as my partner is useless and has no pension at 38. Riddulous!!!

Fleetheart, while I agree that your employer's contribution is niggardly, the auto-enrolment rules means that it must increase each year. By the time the scheme is three years old, your employer should be chipping in 5% or 8%. Anyone who cannot save, and that's a great many people in low-paid work and zero hours, is going to find retirement a bleak prospect. Forget those rosy adverts of healthy 59 year-olds toasting each other on cruises!

A NMW job means we can't afford to save a penny. We don't own and my DH is at the beginning of a journey with vascular dementia. The future worries us both greatly.

The main issue is that we are all living too long

The ageing demographic is costing way too much and the burden will be on young people.

I am in my 50s and am fine for now but when I run out of money/can no longer afford to live in what I consider to be an acceptable fashion, I shall just pop off.

My DC are set to benefit from life insurance that pays out handsomely so long as I die before I am mid 80s (even if it is suicide) so I don't really worry about the house and how I spend the money tied up in that. I would rather stay here but if needs must, I will sell up and rent. When the money is gone then that is when the shit could hit the fan.

Who will be left to pay for the housing benefit of all the ageing renters? The UK birth rate is down 10% on 2012 numbers. There will be few people paying taxes. There is a higher birth rate among immigrant populations, but if Boris has his way, we won't have any of them either, so no lovely young tax payers at all before long.

Fucking dismal isn't it?

We live pretty frugally, so were able to buy a small flat when DS was a baby, then remortgaged and got a 2nd property. This will pay at least £500 a month towards our retirement. However, we will still have to save a lot, be even more frugal and probably also work p time forever. Maybe one day I will go back to f-time, but due to long term health this is not happening overnight.

Re:comment about taxes/investment in unethical things - yes I know. I have limited powers to stop this unless I do a tax protest. Blood money runs very deeply in our society (a lot of economic activity makes money from things we would rather not think about) and it will not stop unless enough people care and make a stand.

I can actively choose to de-invest when it comes to my pension. It may be peanuts but I felt strongly about it.

I will make plans but I'm not going to over worry. I have enough on my plate right now to be kept awake by what may/may not happen in 30 years time.

Maybe we'll all get a kind of universal living payment anyway - as lots of jobs will be done by robots (from surgery to warehouse packing) and the world of work as we know it will have changed forever.

Was just debating with friends whether this idea is a good one, or whether it will create over dependency on the state and moral decline...

We know lots of people who live very comfortable lifestyles, who can comfortably afford to save for retirement, over pay their mortgages and save- but they don't. I can't fathom why, it seems so reckless and as if people just think that it will magically happen. That's totally different to people who can't afford to save into pensions. I'm a sahp parent at the moment but every month Dh pays into his own pension, and one for me (I have my own pension pot also from when I worked) and we do this before we buy luxuries. It's a necessity. So we will be having a 'retirement', but yes, I agree that there could be many people, some of whom have grown used to very comfortable lifestyles, who will spend the latter decades of their lives in poverty.

Incidentally, dh's company used to offer an 'ethical fund' which was a pension scheme that didn't invest in the tobacco industry etc (for example) and it was incredibly poor performing and people complained, and it was pulled.

I work part time and between my employer and I, I am saving £200 a month, why wouldn’t you pay into a pension? it is extra money from your employer. You have to earn £166 a week to be able to pay into NI payments towards you state pension, which is doable on P/T hours.