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One in three families

Could you pay your rent/mortgage?  

41 members have voted

  1. 1. Could you pay your rent/mortgage?

    • For 3 months
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Yes now that you have reminded me my parents did mention they had done something to help protect it. Think its that when one of them dies then that half goes to me and my sister rather than to the surving parent. Not sure how that all works and what the implications are.

 

I have no idea what I would need to save as its irrelevant as I have no money to save. If the both died today then I would estimate I would recieve around 100k ish, not sure but if I invested it in something then I could get a reasonable pension? But of course this depends on when they die and house prices.

 

it's easy to check. I put in some numbers here

https://comparison.moneyadviceservice.org.uk/en/Annuity/FindAnnuity/YourDetails

(you have to make some choices) and this is the pension 100k would buy you.

 

Your income (indicativeshow the detail)

£251 Monthly

£3,020 Yearly

 

Your choices

£100,000 pension pot

No tax free sum

Retire at 65

Single annuity

No guarantee period

Increase by inflation

Health choices

 

 

As you can see, insufficient to live on, even if you owned your home outright. It's likely that bills and food would come to more than £251/month.

 

Alternatively you could just use the 100k of course, if you spent £500/month (which seems modest, but achievable IMO) then it would last 200 months. Or about 16 years.

If you retire at 65 that would take you to around 80...

 

That's buying the annuity at age 65, in the most basic way, no options for spouse or guarantee's, and linked to inflation.

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Thanks for the link Cyclone but I can't put my age in. Im guessing that the calculator is only accurate up to a certain point in the future.

 

I do hope that at some point I can save for the future myself and any inheritance will be an added bonus.

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Talking long term here. Her pension age got pushed up by 7 years, the various providers here and in the Netherlands lost a huge amount in the financial crisis and the USS is constantly sending out signals that it is struggling. Now the BoE actions are pushing down the yields on long term bonds which form the basis for most pension funds.

 

So we are reorganising things, limiting exposure, reducing payments to the pension funds and investing in other things that have a long term return. My pension is completely piecemeal anyway due to the way my career has developed, so I'm considering just lump-summing it all (taking the hit) and putting it into shares.

 

Okay, so pension age was equalised with men, overdue frankly.

The rest of it isn't "slashed" so much as, investments aren't performing all that well. It's not like someone has taken money out of her pension savings.

 

You might want to investigate SIPPs if you're interested in shares.

There are still good reasons to use a pension wrapper (tax being the primary one). But a SIPP is entirely under your control.

 

I opened one recently, can PM you about the details if you like.

 

---------- Post added 11-08-2016 at 10:25 ----------

 

Thanks for the link Cyclone but I can't put my age in. Im guessing that the calculator is only accurate up to a certain point in the future.

 

I do hope that at some point I can save for the future myself and any inheritance will be an added bonus.

 

Well, no, I had to lie that I was 65 in order to see what 100k would buy right now (actually from the 1st Jan 2017 as it was easy to enter).

 

It gives a good indication of just how far a 100k pension pot would go though, £250/month + state pension of max £150/month.

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Okay, so pension age was equalised with men, overdue frankly.

The rest of it isn't "slashed" so much as, investments aren't performing all that well. It's not like someone has taken money out of her pension savings.

 

You might want to investigate SIPPs if you're interested in shares.

There are still good reasons to use a pension wrapper (tax being the primary one). But a SIPP is entirely under your control.

 

I opened one recently, can PM you about the details if you like.

 

---------- Post added 11-08-2016 at 10:25 ----------

 

 

Well, no, I had to lie that I was 65 in order to see what 100k would buy right now (actually from the 1st Jan 2017 as it was easy to enter).

 

It gives a good indication of just how far a 100k pension pot would go though, £250/month + state pension of max £150/month.

 

 

Sorry I thought it could give you an idea of what you would need to save. Or if I had 100k now and invested what the returns would be but of course actually thinking about it its not that simple because investments go up and down. And of course it depends what you put your money in and so on. I would really need proper financial advice when the time comes for inheritance.

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There are different calculators that will tell you that.

 

http://moneyweek.com/moneyweek-basics-how-much-to-save-for-a-comfortable-retirement-61700/

 

Here's an article about it.

 

http://www.thisismoney.co.uk/money/pensions/article-1633402/Pension-pot-calculator-need-save-retirement.html

 

And that's a rather simplistic calculator that seems to just multiply by 20.

So if you want an annual income of £15,000 a year, then it says you'll need a pension pot of 300,000.

 

This last one might be the most interesting

https://www.moneyadviceservice.org.uk/en/tools/pension-calculator

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Okay, so pension age was equalised with men, overdue frankly.

 

I agree with that, but the manner in which it was done in the UK was rather barbaric. In the Netherlands they started planning for this 30 years ago and everybody had plenty of time to react, here it was panic football from the moment it became clear it was unaffordable (Which could and has been predicted for as long as the Dutch have been working to resolve the issue).

 

But, I agree it was overdue.

 

The rest of it isn't "slashed" so much as, investments aren't performing all that well. It's not like someone has taken money out of her pension savings.

 

Unfortunately, in the case of our Dutch pensions it was, we both have a pension with the fund that covers civil servants (I worked in libraries/school and she at University) and that part-private pension has actually reduced in value to a negative after the crisis, it is now on its way back up, but slowly. The USS (Universities Scheme) isn't doing too well either and then she has an NHS pension that has been standing still since she stopped working for them, with inflation it has performed negatively compared to putting the money in a bank and getting even just 3% interest on it.

 

You might want to investigate SIPPs if you're interested in shares.

There are still good reasons to use a pension wrapper (tax being the primary one). But a SIPP is entirely under your control.

 

I opened one recently, can PM you about the details if you like.

 

Thanks, we're having a meeting with our financial advisors soon and will discuss this with them.

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So the pension funds themselves have performed badly. Saying they were slashed suggested some kind of outside intervention, a brown like raid on pension funds or something.

 

The advantage (for you) of using a SIPP is that you can consolidate the funds of all these different money purchase pensions into one place, and it's entirely under your control.

For example, a week ago I decided to invest in a NASDAQ tracker, basically in speculation that the £ will continue to fall against the $, meaning the value of the investment to me goes up without it actually doing anything. It was in early July according to the transaction records. It's only £1000, but it's currently 10.9% up...

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So the pension funds themselves have performed badly. Saying they were slashed suggested some kind of outside intervention, a brown like raid on pension funds or something.

 

The advantage (for you) of using a SIPP is that you can consolidate the funds of all these different money purchase pensions into one place, and it's entirely under your control.

For example, a week ago I decided to invest in a NASDAQ tracker, basically in speculation that the £ will continue to fall against the $, meaning the value of the investment to me goes up without it actually doing anything. It was in early July according to the transaction records. It's only £1000, but it's currently 10.9% up...

 

Yep, that sounds like the sort of thing we'll look into.

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Not that I'm always suspicious of any 'facts' you provide, but where's the source for this?

 

ONS, as usual. And it can easily be found out via google and other search engines.

 

Using data and stats regarding housing tenure, and also regarding HB and LHA claims.

 

There are well over 5million housing benefit (HB + LHA) claims.

Just over 8 million households rent, - we can be generous and round it up to ten million.

 

Thus, we can see using simple back of a DUTY FREE fag packet (or pre-2000 UK DUTY PAID fag packet) calculation, that over 50% of those renting have their rent paid in part/full by the state.

 

 

If UB40 were to release their single, "One in Ten", with the lyrics; "I am the one in ten", today. Then they might be referring to the one in ten of housing benefit claimants who are registered unemployed and claiming JSA. Or perhaps the proportion of economically inactive people who are claiming JSA (not all of these claim housing benefit).

 

Rather than the number of people 'unemployed'.

 

 

It is also worth noting, when information is published regarding housing affordability, it is often regarding affordability AFTER housing benefit is taken into account. Housing benefit often being classed as income (you'd be surprised how often it is counted, but not openly referred to!), as in the recent English Housing Survey...

 

"Gross annual income: The annual income of the household reference person and (any) partner. This includes income from private sources (regular employment, self-employment, government schemes, occupational pensions, private pensions and other private income), state benefits/allowances and tax credits, as collected on the EHS survey (this includes housing benefit/Local Housing Allowance but excludes council tax benefit and Support for Mortgage Interest) and interest from savings. It is a gross measure i.e. income before Income Tax or National Insurance deductions. "

 

 

 

Some more information from the 2013-14 EHS

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/461439/EHS_Households_2013-14.pdf

 

"In 2003-04, 31% of social rented housing was rented to someone who was in employment, a fifth of whom were in receipt of housing benefit.

By 2013-14, 37% were in employment, and a third of these were in receipt of housing benefit"

 

"Around two thirds of private renters said they found it easy to pay their rent after benefits, whilst a third said that this had been difficult"

 

 

"4.20 Once housing benefit had been accounted for, private renters in 2013-14 spent, on average, 43% of their income on rent. This increased to just over half (52%) when housing benefit was not accounted for. The equivalent figures for 2003-04 were 44% and 48%. The increase between these years in the proportion of income (excluding housing benefit) spent on rent is consistent with the recent increase in housing benefit receipt among private renters in work (see English Housing Survey Headline Report 2013-14).

4.21 Some groups of private renters had spent over half of their income (once housing benefit is accounted for) on rent – these included those where the HRP was aged 16-24, unemployed, or in full-time education.

. Multi-person households, households with non-dependent children, and those in the lowest income quintile had also spent this level of their income on rent, Figure 4.2. Although renters in London had much higher incomes, they nevertheless spent a much higher proportion of their income on rent, as illustrated in Figure 4.3."

 

 

"On average, those in the social rented sector spent 31% of their income including housing benefit) on rent in 2013-14.6 Excluding housing benefit from the household’s income, this figure was 42%."

 

 

"Working people not in receipt of housing benefit spent around a quarter (23-25%) of their income on average on rent. Working households in receipt of housing benefit, and retired households both spent an average of 30% of their income on housing costs, after housing benefit was taken into account. Unemployed people spent the largest proportion of their income on housing costs (39% for those aged under 40 and 46% for those aged 40 and above), despite below average rents."

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The fact of the matter is that if you are relying on only your state pension being an amount that you can live on comfortably then you are going to be very surprised. If you don't have a work pension to top up you will be living well below the breadline.

If you do have savings and become ill, as we all will do one day, all of your savings and probably your property will be taken to fund your care.

Fun times :(

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