Reply to: When do you intend to retire?

[DimPrawn]

Me 'ouse is me pension 'innit?

Sell it for a few million in a few years time*


*Based on it tripling in value every week.

Bricks 'n' mortar. Luverly Jubbly.

[lukemg]

I know you've been investing in ISAs and funds for years now and no doubt you are in a healthy financial position, but personally the funds route wasn't for me. I continuously found myself on the wrong end of the investment cycles and hence always waiting for my account to barely make my money back rather than actually making profits. And then what with all the financial woes of the past 10 years, the *ankers (where * = b or w) taking us for a ride, governments skewing the stock markets etc, I have completely lost faith in the financial markets. Wasted 15 years of my life trying to invest there.

I would much rather recommend property, which I find does take more effort but if played well allows you to build up a formidable income over time. Yes, certainly properties prices can go down too (rare though that is these days!) but over time and with the help of reasonable leveraging you end up with assets that throw off decent income every month, without eroding the asset base itself. And personally I find that it's a far more stable game than stocks/funds, for example you can have property let out to organisations on a 3 or 5 year contracts, where they pay guaranteed rent whether the property is occupied or not.

Still don't see myself 'retiring' for at least another 10 years though - too many upcoming expenses with the kids growing up. Though I may well choose to slow down if I get the option!

That's a fair shout and a leveraged property investment can work a treat for lots of people but it's too much like hard work for me and that's before some of the horror stories that have happened to people I know (not just the usual urban myths, real pacific heights stuff).
In a rising market property works well due to leverage AND because it is illiquid (it's hard to sell a bit of it so people are used to holding it for a long time).
If you apply the same discipline to shares it works as well.
SO - Forget getting rich quick, some tip off a mate etc etc you don't stand a chance.
BUT if you can stay the course keep dripping into a low cost index, I am certain you will do ok, I have been through dotcom, credit crunch, the odd war or 3 and not sold and the overall trend has been upwards and with a bit of compounding it works a treat.
They did a study on a brilliant performing fund in the US, it had done something like 15% a year for 20 years. The average individual investor in it had got 3% !! Entirely due to buying it too high and selling when it dipped big. They can't help themselves, if you can't help yourself, don't invest.
They have done this with kids - you can have a sweet now or 3 in half an hour, its to test delayed gratification. Most kids naturally dive straight in, a small percentage wait - these people make good investors.

[ChimpMaster]

Yes they are proposals at the moment but WILL be introduced and this completely changes the picture. The big tax hit only kicks in if you take the lot out in the first year, if you take it in blocks you are only subject to the usual income tax rates meaning you can cream it up to the 40% limit like you are now.
Topped up with some from you ISA stash which is totally tax free and you are laughing.
Have you seen old people at work, way past when they should have packed in but can't ? they all thought they could work forever.
I want that to be optional, that is a real luxury, get some stashed, get it earning money (HAS to be in the market) and get yourself free

I know you've been investing in ISAs and funds for years now and no doubt you are in a healthy financial position, but personally the funds route wasn't for me. I continuously found myself on the wrong end of the investment cycles and hence always waiting for my account to barely make my money back rather than actually making profits. And then what with all the financial woes of the past 10 years, the *ankers (where * = b or w) taking us for a ride, governments skewing the stock markets etc, I have completely lost faith in the financial markets. Wasted 15 years of my life trying to invest there.

I would much rather recommend property, which I find does take more effort but if played well allows you to build up a formidable income over time. Yes, certainly properties prices can go down too (rare though that is these days!) but over time and with the help of reasonable leveraging you end up with assets that throw off decent income every month, without eroding the asset base itself. And personally I find that it's a far more stable game than stocks/funds, for example you can have property let out to organisations on a 3 or 5 year contracts, where they pay guaranteed rent whether the property is occupied or not.

Still don't see myself 'retiring' for at least another 10 years though - too many upcoming expenses with the kids growing up. Though I may well choose to slow down if I get the option!

[tomtomagain]

I hope he's 29 and looking a bit peaky.

I wish he was too. But unfortunately he and I are mid-40's.

[lukemg]

Yes they are proposals at the moment but WILL be introduced and this completely changes the picture. The big tax hit only kicks in if you take the lot out in the first year, if you take it in blocks you are only subject to the usual income tax rates meaning you can cream it up to the 40% limit like you are now.
Topped up with some from you ISA stash which is totally tax free and you are laughing.
Have you seen old people at work, way past when they should have packed in but can't ? they all thought they could work forever.
I want that to be optional, that is a real luxury, get some stashed, get it earning money (HAS to be in the market) and get yourself free

[EternalOptimist]

@ Zardoz
yes, it really is that bad.

Pensions made sense to a lot of people for a lot of years, but when I looked into it, they made no sense to me, so I saved instead. Then when Bobble-eye Brown got involved, they didnt make so much sense to anyone any more

I dont like dancing around swigging a bottle of champers , cackling and shouting 'I told you so'
but, hic

[ZARDOZ]

Under the changes in legislation this year, you can manage your own pension, and draw income as you see fit.

I thought they were just proposals, and most of the money you take out will be hit by tax. As usual suspect the Devil will be in the detail.

[oscarose]

Never; at this rate

[mudskipper]

Perhaps a fan of pensions can explain how they are not a con. Fine if your employer has been contributing. But if you are say a contractor. You have to save approx a million to retire on about 40k a year.

So lets go for a more modest amount:

Say you are 40 and want to retire on 20k a year at 65 (assuming return of approx 3% pa after fees). You'd need to save £1500 a month (450k+220k interest =670k pot)
Average age of death is about 80.So the average person draws 20k for 15yrs= 300k and the 370k the pension company keep?

Now assuming you take the pension savings from your company, you can save on corp tax, say 18k a year to make your 450k of payments you saved 90k tax, BUT you still lost if you die at 80 as you've only seen 390k in benefit ans 300k out of the 670k pot. You'd have to live to almost a 100 to see all your money.

Add to this if you discount 20k in 25 yrs to present value at 2% inflation and it's just 12k or approx minimum wage.

Surely it can't really be this bad and I'm just misunderstanding it?

Under the changes in legislation this year, you can manage your own pension, and draw income as you see fit.

[ZARDOZ]

Perhaps a fan of pensions can explain how they are not a con. Fine if your employer has been contributing. But if you are say a contractor. You have to save approx a million to retire on about 40k a year.

So lets go for a more modest amount:

Say you are 40 and want to retire on 20k a year at 65 (assuming return of approx 3% pa after fees). You'd need to save £1500 a month (450k+220k interest =670k pot)
Average age of death is about 80.So the average person draws 20k for 15yrs= 300k and the 370k the pension company keep?

Now assuming you take the pension savings from your company, you can save on corp tax, say 18k a year to make your 450k of payments you saved 90k tax, BUT you still lost if you die at 80 as you've only seen 390k in benefit ans 300k out of the 670k pot. You'd have to live to almost a 100 to see all your money.

Add to this if you discount 20k in 25 yrs to present value at 2% inflation and it's just 12k or approx minimum wage.

Surely it can't really be this bad and I'm just misunderstanding it?

[speling bee]

I have a friend who sworn blind to me that he'd be dead by the time he was 30. I remind him of this every time we meet up.

You might not make it past 66. But I wouldn't bank on it.

Still you make a good point. You should enjoy every stage of your life ** . However long it may be.




** Sometimes that's easier said than done!

I hope he's 29 and looking a bit peaky.

[tomtomagain]

Exactly - both my grandmothers were dead by 66, so I'm not banking on living a long glorious retirement. I also know far too many people who have died or become too ill to do anything before they retired. I'd rather enjoy life along the way than work my arse off in the hope I'll benefit later.

I have a friend who sworn blind to me that he'd be dead by the time he was 30. I remind him of this every time we meet up.

You might not make it past 66. But I wouldn't bank on it.

Still you make a good point. You should enjoy every stage of your life ** . However long it may be.




** Sometimes that's easier said than done!

[lukemg]

Am I the only old fart on CUK who has retired already?

True enough that when you don't have all the costs of working/mortgages/kids etc you can get by on not a huge amount but I would not fancy living on 10k. I have over £22k for just me. Surprised it was that much considering my lackadaisical approach to pension contributions.

I got 6% on my annuities compared to 12% for my bro in law who retired about 10 years before. By the time some of you lot retire annuity rates will probably be 0.5%, so better start saving.

Congrats, you have clearly set yourself up nicely but I certainly wouldn't consider an annuity. Better options available now.

[speling bee]

oooh good point - I have 2 sheds!

[original PM]

WTF do you think the shed is for?



Kept ZeitPater going for nearly 30 years, did the shed.

And the greenhouse.

oooh good point - I have 2 sheds!