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?

Do not expect a state pension to be enough to live well on. The state pension is a safety net. Even back in the day, the expectation was that you made independent plans for your retirement.

Back then, you might have only lived a handful of years post retirement. It should be our expectation to work into our 70s, which would still give us 10-20 years retirement.

If you work 35 years and then expect to live another 30 years, you need to give very sacrificially to pension schemes. It is very hard to start building a pension pot when you are in your 40s. You need to start from age 21/22.

we take out loans for everything, buy holidays on credit, kitchens on credit, new clothes etc etc.

YABVVVVVU
The future has always looked bleak for spendthrifts who won't manage their finances. It's a shame that those who are unavoidably poorer through health or employment issues will only get the same support as people who wilfully fritter away their money on crap and don't deserve that support. I only know one idiot who gets themselves into debt unnecessarily for clothes and holidays, I don't think that's a normal thing at all once someone is past their 20s. Extending the mortgage for a new kitchen can be a sensible choice, or some car finance schemes work well financially, but even interest free loans for a sofa or other goods are borrowing from the future and therefore limiting your possibilities. If someone has no options then fine (e.g. a new oven because the old one broke and there's no savings), but to take debt for a holiday with a merry shrug of entitlement is ridiculous.

We've only ever had a mortgage as debt and lived below our means, so we were lucky enough to pay it off. Not because that's always the best way of saving, but because right now it helps to keep life very simple with low expenses while DS is very young. Our pensions need more in them for the projected income we want, and we need to increase the other savings we have, but we have plenty of time to do that when DS goes to school. We've assumed a worst case that there could be means testing when we're old enough for our pension, so we aren't relying on getting any state pension. The main thing that worries me is not currently having life insurance, we really ought to sort that out. So apart from me dying early we'll be fine.

I'm really surprised by this.
I'm 29 and my dp 34 and were both paying into pensions and will be until retirement and the mortgage will be paid in 30 years time so ahead of retirement

The generation currently in the 70/80's will be very considered wealthy in retirement in comparison to future generations. They have generous defined-benefit schemes and state pensions financed by those who are currently working.

Many have benefited from the boom in house prices. This has effectively resulted in a huge transfer of wealth from young to old.

Future generations will the benefit from the above and will experience substantial poverty in retirement.

The generation currently in the 70/80's will be very considered wealthy in retirement in comparison to future generations. They have generous defined-benefit schemes and state pensions financed by those who are currently working.

Many have benefited from the boom in house prices. This has effectively resulted in a huge transfer of wealth from young to old.

Future generations will not benefit from the above and will experience substantial poverty in retirement.

butteryyellow - we are on the same page I think. We were in TK Maxx this week - to us its like real luxury shopping!

I agree tenterden. Falling birthrate is a big concern.

@happytoday73
“A colleague nearly 30 saving for her wedding & house deposit while paying off her university debt stated she realistically couldn't start to save for pension till 40... When hopefully married with mortgage & children out of full time nursery.
The pensions advisor told her that was fine... 300 pay days till 65 so just needed to put aside 1k a month... Made everyone in room realise just how much needed to be put away and that for many they would have a retirement in poverty as wouldn't put away nearly enough...”

I’m shocked she was given such bad advice. You can’t wait to start saving a pension until after student loans, after wedding, after house etc. You have to start that first and pay it first even while saving for those shorter term goals. The longer you wait, the more you have to save.

DH and I started at 18 and put away a minimum of 15% of pretax income. We are still paying his last student loan (US system so never written off) and he is in his 50s. We’ve owned and sold several houses, but now rent by choice because we don’t stay very long in one place and the transaction costs of buying and selling a home can make it a loss rather than gain.

My kids all started saving for a pension with their first jobs at age 16...saving up a minimum of £1k to open a Lifetime ISA on 18th Birthday. I’ve taught them to pay their future self FIRST before anything else. And that they need to put away a minimum of 10% pre tax but try and bump it higher if they want a nicer or earlier retirement.

We are on track to retire when the last DC finishes uni in 7yrs. Will be aged 52 and 60. Income will be around £40k/yr with annual increase to cover inflation, then state pension will boost that at 67. It would have been higher if it weren’t for the crashes in 2001, 2004, and 2007 but all good anyway.
And we started with nothing and have had no inheritance or gifts from parents. My dad says he has some inheritance for us, but I don’t expect any and keep trying to talk him into spending on himself. If we do get some, I will probably just set it aside in an interest bearing account for any future grandchildren. Would be nice to pay their uni instead of loans like the rest of us had to do. And even a small sum that grows for 20+ yrs should be a nice pot for them.

A couple of years ago, a financial journalist Cassandra wrote an article suggesting that all those people planning to sell their large houses to fund retirement were going to run into the twin brick walls of a smaller buying generation and a glut of family properties for sale. Which is bad news, both for the vendors of property and their heirs.

My retirement plan it is very simple:

Die young.

There is no way I would like to spend my retirement years alone and with so little money I could not afford to keep the house warm.

"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"

Not an expert, but I think that may be a 'gift with reservation' if you continue to live there and don't pay your adult children market rent - and therefore would be ineffective to avoid iht. Though as I say, not an expert - others will know more!

Problem also if adult dc are married and get divorced - spouse may be entitled to a share, house has to be sold etc. Or if adult dc eg goes bankrupt.

We thought we had it sorted , but now have full time care of our Gd (6) she lived with us for 5 years now, her mother our dd has self inflicted problems and can't care for her ! We are mid 60s worn out and wondering how the hell we are going to support her until she has finished education. The only financial help we get is child benefit, that's probably our fault for working all our life's

"A couple of years ago, a financial journalist Cassandra wrote an article suggesting that all those people planning to sell their large houses to fund retirement were going to run into the twin brick walls of a smaller buying generation and a glut of family properties for sale. Which is bad news, both for the vendors of property and their heirs."

Good news for the buyers though! Ill wind and all that.

Yes, I have thought that myself - there will be so many large family houses coming on the market at the same time that it may well lead to a fall in prices.

I have a government pension so in theory a good one. But having had 3 lots of maternity leave and we're part time for 12 years it's not worth enough to live on! The lump sum option would pay off less than a 3rd of our mortgage. My husband didn't get a pension until he was 40.

Our plans are:
Inheritance x2 which could be worth anywhere between a few k and 300,000 depending on what happens with our parents and care etc in the future!

And sell our business OR get yo the position where a salaried manager can run it.

My husband is convinced we will retire by 55. We're both 41. We shall see....seems unlikely to me!

Whatever happens we have no plans to life entirely from our pensions. Our mortgage started this year and is a 28 year mortgage so paying some if that off will be a priority! I've no idea how right now though

I think you have to be careful of pensions (private ones) It’s not a ‘one size fits all’ Many have ridiculous fees. Some of them are ‘high risk’ shares based offering the potential for much higher returns whereas others are risk free but low return. The government moves the goalposts on pension rules regularly with heavy taxes or obligations to buy innuaties (until recently)

Under advice I’ve put half in a pension and half in an ISA.

I don’t work for them or anything but if you go to Retire Ready it works out if you are on track to retire at the age you want and on what income you’d like. If you’re out it gives you a clear plan on what you can do to get back on track.

I’m glad you started this thread OP. It’s all too easy for us to bury our head in the sand until it’s too late.

Glut of large family homes in the future? Lots of split couples? Maybe the commune will make a come back as a useful economic model.

Based on what I have seen of these in practice, a good 'pre nup' is essential if people fall out with each other.

Interested in the idea of transferring a property into adult child's name - something we had contemplated. May have to investigate the legals re inheritance.

There's loads of good advice available about retirement savings and pensions on MSE and elsewhere on the internet. Which is also very good. The info is out there if people choose to look for it.

The effect of population change is hard to predict though. The ratio of working age people to pensioners now is so much lower than it was in 1919, for instance, and yet we are all so much richer, including those on pensions (in terms of per capita GDP).

It may be that Artificial intelligence will increase productivity so that a smaller working population can more easily support increased numbers of pensioners through taxation. On the other hand the oil is due to run out isn't it? which may have the opposite effect. The future is unpredictable, particularly when technological change is so fast these days.

I'll be fine as long as I stay married 😬

I read that 1 in 3 people retiring have no savings or private pension at all! (The Guardian) at the moment Pension credit may be available but like other benefits is vulnerable to cuts !.The point is we only hear of wealthy pensioners ,but not everyone in their 70s /80s is rolling in it!.Yes everyone should be saving hard for their later years but costs involved with raising families and so on make it hard to acheive .We are not mad spenders but had a new kitchen as we were fortunate to receive a large inheritence .However still have a large mortgage and will need to use some equity release and /or savings to pay it off!

"My retirement plan it is very simple:

Die young"

Mine too. I'm keeping just enough for a one way ticket to Switzerland.

Agreed. Millions of people totally up shit creek with little or no money to retire....so they'll just have to work til they drop. I do think a lot of people think "ah well, millions just like me....nanny state will have to step in" - but WILL they or what if they can't?

@MRex
Completely agree! Ive never bought holidays, clothes, furniture on credit. That is irresponsible.
I’m Gen X and growing up lived through economic hyperinflation crisis in 80s and 90s recession. It was drummed into our heads that there would be no state pension by the time we got old. That jobs for life’s and salary schemes were things of the past. So there was always the expectation that we’d need to take care of ourselves.

Honestly, I don’t mind paying to help the unfortunate but it irks me that people my age who buy everything on credit to have the latest iPhone and go to music festivals every weekend but then have saved NOTHING towards retirement will get a free ride on my taxes.

This is why I'm trying desperately to get a job with the police. Their pensions are better, plus they actually pay better than my job with a private sector company. So better off all round. Can pay more towards my pension with them. And hopefully pay off the mortgage quicker, although that doesn't bother me as much.

Life has always been a struggle. That is what it is. You were considered fortunate if you could avoid warfare. People grew up in poverty on starvation levels suffering incurable illness and dying in childbirth.

You can read about it in books.