Retirement

[Tuono]

Probably half of lads i grew up with are self employed and have done well on it, decent houses had the holidays and so on
But we all in our mid to late 50`s now and none of them have any chance of retiring all say they need to keep going as don't have any sort of pensions.
Also due to the type of work they have done mostly in construction type trades there bodies are knackered not a decent back or pair of knees between them all.

I'm self employed and have been since aged 21. I always paid into a private pension but after about 10 years when I looked it was paying not much more than if I stuck it in a bank so I just carried on with the same payment and stopped increasing it each year. About 7 years ago one of my sisters died and I thought what's the point of grafting so I semi retired, that was when I realised how crap my pension was. I never touched my pension but after about 18 months I went back to full time work and bumped up my pension with lump sums and higher contributions, something I should have done years ago. My private pension is still shite but it's more than enough to live on combined with the state pension. One of the main reasons I'm still working is to keep fit.
My work mate reckons as soon as he hits 55 he's going to take his pension but keep on working. I've tried to tell him to keep his pension until he retires but he says it's performing so shite he just wants to end it.

 

[The Great Soprendo]

Interesting article

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Raises an interesting question in my mind. When thinking about helping our kids financially we usually think deposit for a mortgage or reducing university debt. But if we have to choose between these options, is paying a lumper into a pension pot for them at say 18 a better use of money? Gives them maybe 40 years of growth on that money on top of whatever else they can put in themselves through employment pensions. Ideally help them on all fronts, and I guess the main incentive for paying into a pension...the tax relief... only applies if they're paying enough tax already. But maybe when they start earning decent money and can get that tax relief, it's perhaps one of the best things you can do for them.

 

[The]

Raises an interesting question in my mind. When thinking about helping our kids financially we usually think deposit for a mortgage or reducing university debt. But if we have to choose between these options, is paying a lumper into a pension pot for them at say 18 a better use of money? Gives them maybe 40 years of growth on that money on top of whatever else they can put in themselves through employment pensions. Ideally help them on all fronts, and I guess the main incentive for paying into a pension...the tax relief... only applies if they're paying enough tax already. But maybe when they start earning decent money and can get that tax relief, it's perhaps one of the best things you can do for them.

I was thinking about this the other day actually. The benefits of compounding and their additional contributions will mean their pension should be massive.

 

[stan]

I'm hoping Freedom of Movement is back by time I retire. None of that 90 day nonsense.

So am I as it's a few years off yet.

 

[McMackem]

Raises an interesting question in my mind. When thinking about helping our kids financially we usually think deposit for a mortgage or reducing university debt. But if we have to choose between these options, is paying a lumper into a pension pot for them at say 18 a better use of money? Gives them maybe 40 years of growth on that money on top of whatever else they can put in themselves through employment pensions. Ideally help them on all fronts, and I guess the main incentive for paying into a pension...the tax relief... only applies if they're paying enough tax already. But maybe when they start earning decent money and can get that tax relief, it's perhaps one of the best things you can do for them.

But would they thank you for it at the time? Getting both my kids onto the property ladder has led to them building equity via their mortgages but most importantly having their own homes now instead of later. If they are earning well enough and genuinely don't need a leg up then buying them a pension is probably the best long-term use of a lump of money, but most teens/twenties would find it almost morbid at that age - while they pour money down the drain on rent or are stuck at home with you - these are there best years I'd rather let them enjoy them.

The thread is interesting but a lot of talk about a figure that is needed annually, you can spend big in the first years after retiring, but as you get older the expenditure inevitably reduces dramatically, especially if you last a git long time, so to me its more of a curve. No pension for us, but a great amount tied up in some properties which we will start to harvest as soon as our current readies dwindle too far.

 

[Deleted member 55162]

I'm self employed and have been since aged 21. I always paid into a private pension but after about 10 years when I looked it was paying not much more than if I stuck it in a bank so I just carried on with the same payment and stopped increasing it each year. About 7 years ago one of my sisters died and I thought what's the point of grafting so I semi retired, that was when I realised how crap my pension was. I never touched my pension but after about 18 months I went back to full time work and bumped up my pension with lump sums and higher contributions, something I should have done years ago. My private pension is still shite but it's more than enough to live on combined with the state pension. One of the main reasons I'm still working is to keep fit.
My work mate reckons as soon as he hits 55 he's going to take his pension but keep on working. I've tried to tell him to keep his pension until he retires but he says it's performing so shite he just wants to end it.

This is the main problem with many people. Not understanding WHY the pension is “performing shite” yet never complaining in the good years.

Now that you can get 5% in the bank for the first time in 15 years people tend to forget how good the last 15 years have been for investors compared to deposit savings. So yes, in the last couple of years investment returns have been poor for many reasons but for the past 15 years bank returns have been pretty much non existent whereas investing has delivered really good long term inflation beating growth and will continue to do so. When bank rates start going back down again - which won’t to too far away - it will be too late for all the over reactors who’ve cashed in.

 

[GillytheGilf]

Very similar situation mate.

Ive great friends and family but think its impossible to describe what youre going through when pressure ramps like that.

Ive vowed not to put myself through it again but ive said that before think im serious now like.

Imagine what is main contractors go through che

 

[The Great Soprendo]

But would they thank you for it at the time? Getting both my kids onto the property ladder has led to them building equity via their mortgages but most importantly having their own homes now instead of later. If they are earning well enough and genuinely don't need a leg up then buying them a pension is probably the best long-term use of a lump of money, but most teens/twenties would find it almost morbid at that age - while they pour money down the drain on rent or are stuck at home with you - these are there best years I'd rather let them enjoy them.

The thread is interesting but a lot of talk about a figure that is needed annually, you can spend big in the first years after retiring, but as you get older the expenditure inevitably reduces dramatically, especially if you last a git long time, so to me its more of a curve. No pension for us, but a great amount tied up in some properties which we will start to harvest as soon as our current readies dwindle too far.

Yeah, and like with most things financial, it's probably about finding the right balance.

They might not thank you for it at 18, but you can be sure they will at 60 (even if you're dead and buried by then).

As for the curve, I agree, which is one of the big challenges in knowing when to 'go'. You are very unlikely to know the shape of the curve in terms of your health, inflationary pressures, or other financial burdens you can't anticipate.

 

[Dark Traveller]

Interesting article

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Interesting reading that. I think I should be ok when it comes nearer the time at deciding when I should pack in work. I don’t have a mortgage (I have inherited my parents house, my name was added to Deeds about six years ago). No car. At the moment I have around £100k in cash ISA savings. I tend to call that my ‘break glass in emergency’ fund, which I use for any major work needed for house.

Being paying into LGPS pension since I was 26 yo. If I continue working until I’m 67, then looking at another 14 years to go.

I did a pension estimate calculation:

If I finish work at 65 (in 2035) then my calculated total annual pension will be £17.5k

If I finish work at 67 (in 2037) then my calculated total annual pension will be £21.9k

If I stick it out until I’m 67, then combined with state pension (if it still exists by then) I should be ok in a single person household…. (Fingers crossed!)

 

[Kborom]

The thread is interesting but a lot of talk about a figure that is needed annually, you can spend big in the first years after retiring, but as you get older the expenditure inevitably reduces dramatically, especially if you last a git long time, so to me its more of a curve. No pension for us, but a great amount tied up in some properties which we will start to harvest as soon as our current readies dwindle too far.

I used an IFA to sort my pension pots and to think about future requirements and this is one area that I had not fully realised. Most people dramatically reduce their spending in the mid 70's and then it falls off a cliff by the early 80's. Things like holidays, big ticket spend even buying clothes stops being an issue.
This is worth considering, especially as I retired at 58 and budgeted £10k for holidays every year but only until 80 so my overall forecast requirements where much lower than what I thought that they were going to be.

 

[SPUFF]

Imagine what is main contractors go through che

Managing kernts like me

No ive been there mate, one huge high street store was 80% aircon, 20% fitout so they made me main contractor. Brutal.

 

[Darlo1973]

This is the main problem with many people. Not understanding WHY the pension is “performing shite” yet never complaining in the good years.

Indeed - a lot of people may take a quick glance at their annual pension statement, grumble and then do nothing. Many workplace schemes will allow you to choose how your pension is invested based on your attitude to risk and the default scheme is often overly cautious for younger people. We changed our pension provider a few years ago when we were acquired but the fund which was chosen was a poor performing fund with high fees. The first thing I did was change it to a low cost Vanguard fund. Took less than 5 minutes,

 

[Select coaches]

Probably half of lads i grew up with are self employed and have done well on it, decent houses had the holidays and so on
But we all in our mid to late 50`s now and none of them have any chance of retiring all say they need to keep going as don't have any sort of pensions.
Also due to the type of work they have done mostly in construction type trades there bodies are knackered not a decent back or pair of knees between them all.

Can never understand this, been self employed most my working life and find pension contributions are a great way of getting the tax down in the good years.

 

[arthursboy]

I remember moaning about my pension payments when I was skint and had 2 kids a wife and a mortgage to fund.
If I could have stopped the payments I would have as life was tough and money was short.
However 30 years later and my pension has changed my life and gave us financial stability for the rest of our lives.
It even finds the occasional away day following the lads

 

[Darlo1973]

Can never understand this, been self employed most my working life and find pension contributions are a great way of getting the tax down in the good years.

I suspect a lot of self-employed people have other creative ways of getting their tax bill down...

 

[DaveH]

The DB part does not have a “pot size” as such.

It provides a “defined benefit” which is income or an optional lump sum plus a reduced level of income therefore the BENEFIT - in this case the income you receive from the plan - is defined.

You can get a cash equivalent transfer value but that is only the value if you transfer it. It’s not what the pot is worth.

Cheers. It sounds like "pot" applies to different types of pension to what I have.

It is the annual income side I'm looking at, which all being well, should be ok.

A couple of years ago I did a spreadsheet estimating what we would need at the point of me retiring, up to me being 85 and if I had that right, we should be £2,300 in excess, spread over 25 years. That is two extra pub lunches per year, we can go mental!

 

[SpiritofBurnden]

Raises an interesting question in my mind. When thinking about helping our kids financially we usually think deposit for a mortgage or reducing university debt. But if we have to choose between these options, is paying a lumper into a pension pot for them at say 18 a better use of money? Gives them maybe 40 years of growth on that money on top of whatever else they can put in themselves through employment pensions. Ideally help them on all fronts, and I guess the main incentive for paying into a pension...the tax relief... only applies if they're paying enough tax already. But maybe when they start earning decent money and can get that tax relief, it's perhaps one of the best things you can do for them.

They can't access the money in a pension for decades after they start work though.

If you help them out with a deposit for a property they'll at least be paying a mortgage rather than rent.

A big pension isn't as much use if you're spending a big chunk of it on rent when you retire.

 

[Deleted member 55162]

Cheers. It sounds like "pot" applies to different types of pension to what I have.

It is the annual income side I'm looking at, which all being well, should be ok.

A couple of years ago I did a spreadsheet estimating what we would need at the point of me retiring, up to me being 85 and if I had that right, we should be £2,300 in excess, spread over 25 years. That is two extra pub lunches per year, we can go mental!

Yeah, a “pot” is where you log in and see a monetary value. So that will be all personal pensions, auto-enrolment plans, defined contribution workplace schemes, Section 32 buy outs etc.

 

[DaveH]

I think A lot of the ones working into old age are self employed

True, and it depends on what self employed you do. If you are essentially doing what you are told by who you signed a contract with, then it has the same pressures as being employed. I.e., if you are signed up to provide a service.

Out of my vets football team, a few are retired and the rest planning towards it, except one bloke who just doesn't want to retire. He built his business up from scratch, initially a shop. But then he realised to get quality products he would have to source them himself and import them. He deals with things like student/hippy stuff, the sort of shops that sell insence, baggy clothes and have stalls at music festivals. So he was off to the likes of Mexico, Nepal, more remote places in India etc, to check out places to buy from and make sure it was all ethical, not sweat shop etc. He spends a fair bit of time per year travelling to these places and because he brings in lots of money, the locals take him out with pride to see their country, walk their mountains, eat the authentic food etc.

He realised that rival shops (there seems to be one in each town so not close rivals) also had the same supply and import issues, so he became an importer to stock them too.

His kids now run most of the business, so it seems like he works the hours and days he wants, spends a fair bit of time travelling to amazing and remote parts of the world, has a laugh with the warehouse lads and doesn't have any pressures of reporting to anyone. He makes very good money if he works or if he doesn't.

I can see why he doesn't want to retire from that.

 

[Matt Hopkins]

Interesting article

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Yeah interesting, just skimmed it like,in as much as it says £28600 for a moderate retirement. I've said before everyone's wants and needs are different but that works out after tax of £2100 ish per month, I'd be living more than a moderate retirement if I was getting that