Greek Pensions - and how much you need to save in the UK

ToneControl

I watched a programme last week about how much people need to save in the UK to be able to have a "normal" retirement

Basically they said £800 a month

I checked this, and it's true, starting at 25, you need to save £799 a month to get a total £27.8k including your state pension, at age 68

https://www.standardlife.co.uk/c1/guides-and-calculators/pension-calculator.page

So for someone on £30k, that's 32% of your pay going into your pension

Contrast that with the pensions available in Greece:

Christos Bourdakis, a retired government accountant. 
He is a full-throated proponent of a system that pays him a yearly gross pension of 30,000 euros, or $41,000, more than he was making when he retired 13 years ago at the age of 60.

How many of you guys have got a pension plan that could give you $41k a year? That's a lot of cash in Greece too.

Fretwired

There are people in the UK with generous final salary pension schemes. A friend of mine just retired at 57 after working 38 years at BT. He has a final salary pension scheme paying him £40K per annum - it rises with inflation. He was only a lowly manager at Open Reach. And I have a client who was a principle at an FE college who has retired at 58 .. she has a £1.1 million pension pot. A lot of senior public sector workers bailed out and retired early to prevent themselves being caught by Osborne's pension limits.

Young people today stand no chance.

ToneControl

Yes, it's scary

I think anyone still working with no final salary scheme is likely to be in deep shit, unless they have really addressed the issue or inherited a lot

Fretwired

ToneControl said:

Yes, it's scary

I think anyone still working with no final salary scheme is likely to be in deep shit, unless they have really addressed the issue or inherited a lot

I think people will be working until they die ....

joneve

Fretwired said:

ToneControl said:

Yes, it's scary

I think anyone still working with no final salary scheme is likely to be in deep shit, unless they have really addressed the issue or inherited a lot

I think people will be working until they die ....

Yep, looks like I'll be heading that way. 

mellowsun

ToneControl said:

Yes, it's scary

I think anyone still working with no final salary scheme is likely to be in deep shit, unless they have really addressed the issue or inherited a lot

I'm in that situation, just defined contribution schemes that will pay out a pittance (I think I need a pot of 150K to pay out 5K per year in annuity).

My solution was to pay off the mortgage 15 years early instead, so for the next 15 years 80% of my income can go towards retirement savings of one form or another. Might consider going into buy to let if prices crash post-Brexit, yields should be better.

lloyd

I'm hoping to die early if I'm honest.

octatonic

I simply don't believe pensions are the best way to save for the future.

We have small pensions but shift the bulk of the income in to property/stock and it does a hell of a lot better, albeit with more risk.

Sporky

octatonic said:

I simply don't believe pensions are the best way to save for the future.

I concur.

For starters it's just too easy for totalitarian governments to raid them for tax.

ThorpyFX

Sporky said:

octatonic said:

I simply don't believe pensions are the best way to save for the future.

I concur.

For starters it's just too easy for totalitarian governments to raid them for tax.

Cant agree more, I had a "gold standard" forces pension that has been utterly decimated by this government. Its knocked any confidence i had in having a pension pot to look after my family later in life.

CabbageCat

I'm putting 10% into pension (with work matching half that) but my biggest retirement pot is going to be plain old savings (taxed and untaxed) - varies but perhaps 20-25% of gross. £10k a year for an old person with no debts will be absolutely plenty. When my hoard reaches about that level (taking a reasonable stab at life expectancy) I'll think about giving up work.

I guess the people working until they are 65 to give them an expected £30k in retirement must really like their jobs or really like expensive cars.

rlw

I've put a constant but small amount -  £275 pm -  into my pension now for about thirty years and its still worth fuck all in real terms.

My house is my pension having gone up in value over 5 times in twenty years.  We will sell and move somewhere cheaper, live on capital and pensions.  You can't take the money with you so spend it before you die.

Our retired neighbours - a  head teacher and a university lecturer -  have a pension of £70K between them and insist that they have paid into that so its not a burden on the state.......................

BigMonka

Isn't £30k a year a fairly decent amount when retired? Assuming you've paid off your mortgage and kids have left home, then it leaves you plenty for normal living and some nice holidays

quarky

octatonic said:

I simply don't believe pensions are the best way to save for the future.

We have small pensions but shift the bulk of the income in to property/stock and it does a hell of a lot better, albeit with more risk.

You can buy stocks as part of your pension!

Just don't be too reliant on any one thing. I will some money via a final salary pension when I retire, but I wouldn't be surprised to see that take a huge hit before I get to take it. So I have the state pension and also my personal investment in shares via an ISA. The theory is that I should be able to rely on two out of those three. I won't be retiring on anything like £70k (and my wife doesn't work) but should have enough to live OK, and that is all you can ask for.

I certainly won't be living like I was on a Greek pension.

ToneControl

rlw said:

I've put a constant but small amount -  £275 pm -  into my pension now for about thirty years and its still worth fuck all in real terms.

My house is my pension having gone up in value over 5 times in twenty years.  We will sell and move somewhere cheaper, live on capital and pensions.  You can't take the money with you so spend it before you die.

Our retired neighbours - a  head teacher and a university lecturer -  have a pension of £70K between them and insist that they have paid into that so its not a burden on the state.......................

red brick uni lecturers have indeed paid into a real fund, which has been invested well, and can afford to pay out

Local govt schemes are "funded" too, and old Polys use those. I don't know if all unis use these 2

The pensions of teachers, firefighters, NHS workers, the police and the armed forces are all "unfunded", and are paid by the taxpayer when the person retires

https://www.unbiased.co.uk/news/what-you-need-to-know-about-your-defined-benefit-pension/4519

there are some huge liabilities there, and it's a minefield for future governments - we could end up like the Greeks and be unable to afford  to meet promises made.  What would happen then? increase taxes or reduce public sector pensions?

quarky

ThorpyFX said:

Cant agree more, I had a "gold standard" forces pension that has been utterly decimated by this government. Its knocked any confidence i had in having a pension pot to look after my family later in life

So the current government shafted public pensions, and the previous labour government shafted private pensions. I guess we should have seen it coming

ESBlonde

Given that the average UK salary is about £26k PA anyone wanting £30k+ is going to be doing well above average.
State pension is going to be fixed at £144pw or £7.5k PA iirc. Having a decent pension of say £15k on top of that will fund a comfortable life for most people, if you are above most people YMMV.
My ex father in law retired at 55 from BT 10+ years ago with shares and about £30k PA. He then went back and contracted in his old job at £75 an hour for a few years! then retired and took a job as assistant 'handyman' in a care home to relieve the bordum.
It seems that some early baby boomers did really well and stories of huge pensions abound, remember for every one of those possible 10 are on state pension only. It is up to each of us to maximise the future.

ThorpyFX

ToneControl said:

rlw said:

I've put a constant but small amount -  £275 pm -  into my pension now for about thirty years and its still worth fuck all in real terms.

My house is my pension having gone up in value over 5 times in twenty years.  We will sell and move somewhere cheaper, live on capital and pensions.  You can't take the money with you so spend it before you die.

Our retired neighbours - a  head teacher and a university lecturer -  have a pension of £70K between them and insist that they have paid into that so its not a burden on the state.......................

red brick uni lecturers have indeed paid into a real fund, which has been invested well, and can afford to pay out

Local govt schemes are "funded" too, and old Polys use those. I don't know if all unis use these 2

The pensions of teachers, firefighters, NHS workers, the police and the armed forces are all "unfunded", and are paid by the taxpayer when the person retires

https://www.unbiased.co.uk/news/what-you-need-to-know-about-your-defined-benefit-pension/4519

there are some huge liabilities there, and it's a minefield for future governments - we could end up like the Greeks and be unable to afford  to meet promises made.  What would happen then? increase taxes or reduce public sector pensions?

Its obvious isn't it..... they will reduce pensions payout. Hence my concern (without wishing to sound like a tinfoil hat wearing individual). the answer is, pay off your mortgage fast, early and then save as much cash as you can and spread it over several areas. Stocks, bonds, property and cash (including other currencies)

The sad thing about this is that, these "promises" are part of our working terms and conditions - our contract. if governments are willing to shaft the people who effectively prop them up through the maintenance of law and order, it tells you all you need to know.

ThorpyFX

ESBlonde said:

 It is up to each of us to maximise the future.

Agreed, theres a good book about this.... its called Rich Dad, Poor Dad.

exocet

For the past 20 years I've maintained that people don't earn enough to fund both:

a) Pension

b) House

If Housing gets cheaper, we can save for pension - you can't have it both ways unless you are very fortunate with having Double Income family.

As others have said, the presence of Final Salary pensions for both Public and Private sector employees is masking the financial horrors that are heading our way (not talking Brexit here by the way - this financial issue was coming our way regardless of Brexit).

Once Final Salary schemes finally disappear ( as they have been for a while), more people will be exposed to the reality of saving for retirement. At which point, something else will have to "give" because there won't be the money to spend on other large purchases.

exocet

BigMonka said:

Isn't £30k a year a fairly decent amount when retired? Assuming you've paid off your mortgage and kids have left home, then it leaves you plenty for normal living and some nice holidays

I think that sometimes the amount stated as a "comfortable living pension" is overstated by the various authorities, probably as scare tactics or if you are a pensions investment company - as a means of encouraging people to shove more money your way. Currently, you don't pay N.I contributions on pension income so that gives you an additional 10% compared to the same income derived through PAYE employment. That said, things change......post Brexit I can see us having to pay more to "fill the black hole in public finances".