Job Discussion Forums

[Zero]

At what age can Brits start getting their national pension? What if you already own a home: Then what of the rent payment?

[TeresaLopez]

Mexico might also be a place to consider. It is easy to work 3 or 4 hours a day, in fact, lots of people complain about that being all they can find to do. Cost of living is low for just about everything - rent perhaps 50% of a comparable apartment in the US, food is far, far cheaper, public transportation, including taxis is quite inexpensive. The only things that are more expensive are luxury items and imported items, though that has changed a bit in the last few years.

[Hod]

[Perilla]

[sidjameson]

I think this is an excellent discussion on pensions and old age, and I am even willing to derail my own thread, hehe.

Hod, do you really think that the bottom 50% of the UK, the cleaners, shop staff, office workers, bus drivers, most of whom have no private pension, do you think there is a government that will ever win an election which allows these people to be homeless because they havent saved money to pay for their own pension?

I just can not see a million homeless pensioners. 30% of the Uk rent. Mostly poor of course. You really envisage most of them being homeless in their old age?

I am not worried about being housed in the UK at 66. I am worried about the crime, weather, general anti social aspects of the Uk culture.

[Perilla]

[Hod]

If you are worried about the UK�s society in twenty years time, then start planning now. You might get to choose where to live. Some friends of my parents have been London council tenants all their life. This sounds like a clich�, but they are now afraid to go out.

Politicians want votes. No government will admit to making people homeless. The question remains, however, where will the money come from to help all these poorer people?

Taking National Insurance voluntary payments as an example. A crude calculation of 626 Pounds a year for thirty years gives a pot of just under 19000 Pounds. When payback time comes, 96 Pounds a week will not even last four years. OK, I have glossed over inflation, the current 626 Pounds will increase, and I assume the money will gain some interest. But with UK life expectancy currently 78 years for men and 82 for women, it is easy to see that the money will run out. Bear in mind, many people will paid in for less than thirty years.

Then consider that life expectancy is likely to increase, as will the ratio of pensioners to working people. Using working people�s tax and NI payments to fund pensioners will have to be a short-term option, but even that will become less and less viable.

No one will be homeless, but what sort of accommodation are you expecting with the above scenario? If you make no plans of your own and believe a future government can help, what sort of life will it be?

[Perilla]

[Hod]

OK, I�ll try again with my calculations. Bear in mind that professional pension forecasts are also crude estimates. Unlike me, however, they do try and factor in inflation, which is also guessed.

Take two: Freddy Skinflint �s State Pension Forecast

Fred�s current age: 37
State Retirement Age: 67
Annual voluntary NI contributions: 626 Pounds (1)
Current State Pension: 97.65 Pounds (2)

Let�s assume a compound interest rate of 4%, which is a bit generous towards Fred, but that�s the sort of guy I am.

Fred�s final pot of money after 30 years: 36514 Pounds
@97.65 a week, Fred�s money runs out after 7 years and 2 months.

That looks better, especially if Fred dies after 7 years and 2 months. Unfortunately Fred can�t rely on that happening. Fred�s life expectancy is 78 or 82 (if he was a woman).

A real expert would pour scorn amongst other things on these figures, but the only things neglected are a gradual increase of the 626 Pounds (because no one else knows how much future contributions will be) and inflation (because no one else knows�).

Again, not everyone will contribute for thirty years, whilst people who never leave the UK and work non-stop will have contributed for over forty years. So, who knows? Just as no one would rely on my figures above, don�t rely on figures from any government.

97.65 Pounds a week. Don�t spend it all at once, Freddy.

1) http://www.hmrc.gov.uk/payinghmrc/class3nics.htm

2) http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_183774

[fladude]

Just be glad you brits have something. In the US, if you default on student loans they take your social security.... So if you default, the best thing to do is basically leave the country, unless you have some real hope of making a ton of money one day (which you could probably do in another country just as easily).

[Perilla]

Hod, I'm as dubious as you are regarding anything to do with government, and I wouldn't be at all surprised if they pull something nasty regarding pensions. Still, the pension system has worked OK until now, despite its shortcomings, so I have some faith that it won't disintegrate completely in the coming years.

Btw, are you sure it's just 30 years' payments to achieve full pension? Methinks it's longer - I think you are only allowed five non-payment years during your working life. In fact, 39 years seems to ring a bell. I have amassed seven non-payment years already, so I certainly won't get the full pension. People who don't pay sufficient contributions have their pension reduced proportionately.

So long as I can get my hands on my state pension, whatever it's worth, while retired abroad (if I make it to 66 or 67 or whatever) I'll be reasonably content.

[sidjameson]

Yes it is 30 years. It was recently changed.

Hod, I suspect that if we were having this conversation in 1974 after the oil crises you would be saying the same thing. But 35 years later, my mother who recently retired with no pension whatsoever has landed in a rather cozy 2 bedroom house rent free and a 550gbp a month to live on. Scot47 reports similar.

The house is worth a good 180k i would say, 30 years NI contributions another 20k and to just make it up to the same 550gbp it would take an annuity of 150gbp a month. No idea, but a guess, another 50k of savings.

So my mother would have needed to save 250k just to be in the same position she is in now. You have to agree that under the current system for working class people it pays to save NOTHING.

As to the future. Current blip aside, the wealth of nations has grown beyond all belief for the last 2000 years. I see this trend continuing. Therefore I dont see homeless pensioners in the UK. I dont see the minimum income of retirement falling behind inflation. I dont see the housing stock going down in quality.

My only worry is the neighbours. oh and the weather.

For most teflers saving 250k is a pipe dream and that is only to bring you level with my mum. Skint Freddy should enjoy himself and not worry about the future.

[Perilla]

[sidjameson]

Yes, my understanding is that anything you have over about 10,000 pounds. It is just taken off the extra benefits you get.

Of course, buying a home removes the lottery of whether you will like the place you are given. And paying 20k NI over your life allows you to get a pension which you can take abroad rather than having to stay in the UK. The 50k you would need to buy an annuity allows the same thing.

[Perilla]