duck
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Post by duck on Sept 20, 2015 5:42:57 GMT
Earlier this year I pulled the plug on working ('self employed' in nuclear engineering) in order to spend more time with my motorcycles, lathes and milling machines!
I have for many years run a spreadsheet with all expenditure on it. Expected changes in circumstance, expected inflation, savings etc etc taken into account. This projects way into the future and predicts when Mr & Mrs Duck will run out of cash. I have used very conservative returns for my savings on the spreadsheet (currently 2.75% after tax) and this figure automatically adjusts available 'cash' on a yearly basis.
I lost faith in the pensions industry many years ago due to a couple of events. Robert Maxwell steeling my first pension pot and another very large company 'loosing' 75% of my cash in admin charges and 'Stock Market losses'. I note that my only pension left changed its estimate earlier this year from £6 per year to £4 per year, nice!
With P2P/P2B I take a pessimistic view and factor in losses far in excess of those predicted by the platforms (@ 3.5% capital overall, some platforms higher some lower) to produce a low post tax estimated figure that is compared with the 2.75% figure on the spread sheet. I do however allow for tax on the full amount of projected interest making no allowance for the proposed loss offset. P2P/P2B has outperformed my projections by some way since I got more involved back in 2012. This has improved this year as I make certain Mrs Ducks tax allowance is fully utilised before her pensions kick in (some years yet).
In spite of my best endeavours I failed, along with everybody else, to predict the changes to Dividend Tax in the last budget. This directly impacts my slow run down of my Company which has decent 'savings' that will need to be withdrawn before it can be closed down. Luckily my spreadsheet includes a line for unforeseen losses so any extra tax can be absorbed there.
Brave? Foolhardy? Irresponsible? ...... or perhaps sensible? +50 hour weeks take their toll, so whilst the Government may have wanted me to keep working till 70 I've taken an early plunge content that I have things covered ..... time to enjoy myself!
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Post by oldnick on Sept 20, 2015 6:16:03 GMT
Up till now the active voting public have always chosen some version of the financial status quo. Imagine a future when a Trotsky inspired leadership manages to turn out all of the electorate on the basis that 'public ownership is for the good of all'. That would never be extended to include private pensions or savings of course... . No, I can't imagine that. But then I didn't predict the rise of the SNP, Facebook, or Japan beating the Springboks either! Better add another line to the spreadsheet? Just joshing.  |
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duck
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Post by duck on Sept 20, 2015 6:29:24 GMT
Up till now the active voting public have always chosen some version of the financial status quo. Imagine a future when a Trotsky inspired leadership manages to turn out all of the electorate on the basis that 'public ownership is for the good of all'. That would never be extended to include private pensions or savings of course... . No, I can't imagine that. But then I didn't predict the rise of the SNP, Facebook, or Japan beating the Springboks either! Better add another line to the spreadsheet? Just joshing. Luckily we own a house abroad, so sell the one we currently live in and flee ....... proceeds from the sale of this house would do very nicely 
My spreadsheet remains unchanged!
EDIT might have to allow for transit of my machines, hmmmmmm.
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pikestaff
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Post by pikestaff on Sept 20, 2015 7:38:04 GMT
Whether you can earn inflation after tax on your portfolio in old age is another matter. I'd hope to beat that now, but when I'm 80?? Who knows how many marbles I will still have. Fortunately I have a pension as well so I don't need to take out 4%. The best marbles protection I know of today is deferring the state pension. The value for money is excellent... On the numbers, yes. But govt spending on pensions is unsustainable. Something will have to give. The state pension is a large enough proportion of my projected income that I don't want to increase my exposure.
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Post by oldnick on Sept 20, 2015 7:50:43 GMT
Up till now the active voting public have always chosen some version of the financial status quo. Imagine a future when a Trotsky inspired leadership manages to turn out all of the electorate on the basis that 'public ownership is for the good of all'. That would never be extended to include private pensions or savings of course... . No, I can't imagine that. But then I didn't predict the rise of the SNP, Facebook, or Japan beating the Springboks either! Better add another line to the spreadsheet? Just joshing. Luckily we own a house abroad, so sell the one we currently live in and flee ....... proceeds from the sale of this house would do very nicely
My spreadsheet remains unchanged!
EDIT might have to allow for transit of my machines, hmmmmmm.
Exporting the means of production? I think not, brother!
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Post by oldnick on Sept 20, 2015 8:01:12 GMT
The best marbles protection I know of today is deferring the state pension. The value for money is excellent... On the numbers, yes. But govt spending on pensions is unsustainable. Something will have to give. The state pension is a large enough proportion of my projected income that I don't want to increase my exposure. On the other hand - imagine a Trotsky inspired leadership...
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pikestaff
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Post by pikestaff on Sept 20, 2015 8:26:32 GMT
On the numbers, yes. But govt spending on pensions is unsustainable. Something will have to give. The state pension is a large enough proportion of my projected income that I don't want to increase my exposure. On the other hand - imagine a Trotsky inspired leadership... Why "on the other hand"? I think means testing is more likely to be introduced by a left-wing govt than a right-wing one.
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agent69
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Post by agent69 on Sept 20, 2015 8:35:39 GMT
Earlier this year I pulled the plug on working ('self employed' in nuclear engineering) in order to spend more time with my motorcycles, lathes and milling machines!
.................. Robert Maxwell steeling my first pension pot From Mirror group newspapers to the nuclear industry? Interesting career move. Before retiring did you just have a newspaper stall by the main gate at Sellafield
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Post by carol167 on Sept 20, 2015 8:52:07 GMT
I'm only recently turned 34 but would hope to have the choice to work or not by 50. I don't earn huge amounts but do save about 40% of my wages while still having a fairly active social life. If I was no longer working and living off investments, I would describe myself as retired. The unofficial rule is that you need 25 times your annual spend in savings. That way you can pull out 4% each year and if history repeats itself you will not dip into your capital. You may find you actually add to capital in boom years. Would be interested to know (if I'm not being too nosey) if the ones that say they are living off savings.. Well if they had 25 times expenditure before they pulled the plug on working life? Just done the math.... and the amount invested is 26.6 times the nett income I get each month (which is slightly more than the half I was used to when working - would save the other half (so I am technically better off than when I was working)). I do have an additional 5 times currently invested getting capital growth. Couldn't have done this without P-2-P in the current climate. I only have <25k in the stock market. I currently invest in 8 different P-2-P platforms. Pension kicks in in 14 years time (final salary). That will nearly double my current income.
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duck
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Post by duck on Sept 20, 2015 9:53:49 GMT
Earlier this year I pulled the plug on working ('self employed' in nuclear engineering) in order to spend more time with my motorcycles, lathes and milling machines!
.................. Robert Maxwell steeling my first pension pot From Mirror group newspapers to the nuclear industry? Interesting career move. Before retiring did you just have a newspaper stall by the main gate at Sellafield  Uncle Bob did the same to the engineering companies that he owned! Sellafield is interesting but 'other places' more so .......
My favourite quote of all time came on Radio 4 the morning after Uncle Bob had died. It came from somebody who had eaten dinner with Bob on his ship the night before. When asked how Bob had appeared the answer was 'his usual buoyant self' ...................
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Post by Deleted on Sept 20, 2015 11:18:18 GMT
I stopped work at 50 (5 years ago almost to the day) after doing the same basic calculations including the suicide option. Since then I've found the stock market has been very kind though it seems to get harder May to September. I've done a number of MOOCs and recommend the FutureLearn financial awareness course as a good place to spend a few hours. I thought I knew it all until I read some of the other student's comments. Job title "Independently Wealthy", which may challenge my Protestant Work Ethic but is reasonably accurate. My biggest piece of advice is; whenever you hear an advisor say "we only charge 1%", ask why not only 0.1%? FC are you listening?  |
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james
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Post by james on Sept 20, 2015 11:21:07 GMT
The best marbles protection I know of today is deferring the state pension. The value for money is excellent... On the numbers, yes. But govt spending on pensions is unsustainable. Something will have to give. The state pension is a large enough proportion of my projected income that I don't want to increase my exposure. Are you aware that the projected cost increase is only from 6.0% to 6.6% of GDP? Something already has been giving, notably since the Turner Report projections: 1. The flat rate scheme is a huge cut to the state pension weekly amount for long term workers, imposing a cap of around £155 instead of the £190 or so that even a low earner would accrue for a full working life under the current rules. 2. Money has been transferred from the benefits part of general taxation spending to the national Insurance budget for pensions by introducing and increasing payments for low time and non-workers, so that they are likely to get the full flat rate cap level instead of receiving benefits paid for out of general taxation. this is a big part of why there has been the cut to benefits for long term workers. At the time of the Turner Report is was projected that around 65% of state pension recipients would be on means tested benefits (the Minimum Income Guarantee via Savings Credit and Guarantee Credit) due to inflation-linked increases in means tested benefit levels and this change has addressed that to some degree. 3. A later state pension age increases NI revenue and decreases state pension payouts for each extra year. Both the aligning of female ages and increase for both. 4. Further announced increases to state pension age if life expectancy continues to grow. At the time of the Turner Report the projected share of GDP if no changes were made was a steady increase from 6.25% in 2005 to 8% in 2040. Currently the Pensions Policy Institute is projecting a cost of 6.6% for state pension benefits including Pension Credit and 7.3% combined once housing benefits and Attendance and Disability Living Allowances are added, by 2032. For 2012/13 they give 6.0% and 7.1% respectively. So the pure pensions cost is actually projected to increase from 6.0% to only 6.6%, which may perhaps surprise you given your thought that the cost is unsustainable: it's already largely being sustained and is projected not to rise hugely now. For context prior to Hutton report related changes the cost of pensions for public sector employees was projected to be 2% of GDP in 2014-15 falling to 1.5% by 2060. 18% of the working population were working in the public sector in September 2013 so that 18% and past employees would get 1.5% of GDP while they and everyone else combined would get 8% on top.
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agent69
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Post by agent69 on Sept 20, 2015 12:45:46 GMT
From Mirror group newspapers to the nuclear industry? Interesting career move. Before retiring did you just have a newspaper stall by the main gate at Sellafield Uncle Bob did the same to the engineering companies that he owned! Sellafield is interesting but 'other places' more so .......
My favourite quote of all time came on Radio 4 the morning after Uncle Bob had died. It came from somebody who had eaten dinner with Bob on his ship the night before. When asked how Bob had appeared the answer was 'his usual buoyant self' ...................
Lots of great tales about Uncle Bob. My favourite (possibly true, possible not) relates to the time he was in the penthouse of Mirror group newspapers late at night and was feeling a bit peckish. He phoned down to the kitchens in the basement where a young voice answered the phone: - send up food straight away said Maxwell
- B*llocks said the voice on the end of the phone
- Do you know who you are talking to said Maxwell
- No said the voice on the end of the phone
- It's Robert Maxwell
- There's a moments silence
- Do you know who you are talking to said the voice on the end of the phone
- No said Maxwell
- Well b*llocks again then said the voice on the end of the phone
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pikestaff
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Post by pikestaff on Sept 20, 2015 14:40:48 GMT
On the numbers, yes. But govt spending on pensions is unsustainable. Something will have to give. The state pension is a large enough proportion of my projected income that I don't want to increase my exposure. Are you aware that the projected cost increase is only from 6.0% to 6.6% of GDP? Something already has been giving, notably since the Turner Report projections: 1. The flat rate scheme is a huge cut to the state pension weekly amount for long term workers, imposing a cap of around £155 instead of the £190 or so that even a low earner would accrue for a full working life under the current rules. 2. Money has been transferred from the benefits part of general taxation spending to the national Insurance budget for pensions by introducing and increasing payments for low time and non-workers, so that they are likely to get the full flat rate cap level instead of receiving benefits paid for out of general taxation. this is a big part of why there has been the cut to benefits for long term workers. At the time of the Turner Report is was projected that around 65% of state pension recipients would be on means tested benefits (the Minimum Income Guarantee via Savings Credit and Guarantee Credit) due to inflation-linked increases in means tested benefit levels and this change has addressed that to some degree. 3. A later state pension age increases NI revenue and decreases state pension payouts for each extra year. Both the aligning of female ages and increase for both. 4. Further announced increases to state pension age if life expectancy continues to grow. At the time of the Turner Report the projected share of GDP if no changes were made was a steady increase from 6.25% in 2005 to 8% in 2040. Currently the Pensions Policy Institute is projecting a cost of 6.6% for state pension benefits including Pension Credit and 7.3% combined once housing benefits and Attendance and Disability Living Allowances are added, by 2032. For 2012/13 they give 6.0% and 7.1% respectively. So the pure pensions cost is actually projected to increase from 6.0% to only 6.6%, which may perhaps surprise you given your thought that the cost is unsustainable: it's already largely being sustained and is projected not to rise hugely now. For context prior to Hutton report related changes the cost of pensions for public sector employees was projected to be 2% of GDP in 2014-15 falling to 1.5% by 2060. 18% of the working population were working in the public sector in September 2013 so that 18% and past employees would get 1.5% of GDP while they and everyone else combined would get 8% on top. Thank you, that's interesting and I appreciate the detail. Although it looks like I'm out of date on pensions affordability in isolation, it doesn't really change my view. The total cost to the govt of the ageing population is still growing fast (NHS, housing benefit, care costs) and I worry that the pension could be shaved or means-tested at some point.
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Post by oldnick on Sept 20, 2015 14:56:26 GMT
Presumably the estimates of the affordability of pension provision into the future take account of the reduced numbers of the working population relative to those pensioners they will support?
Germany appears to have woken up to this by accepting large numbers of young immigrants.
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Uncle Bob did the same to the engineering companies that he owned!