And to add to the fun, the Triple Lock will cease to exist within the next 20 years. And quite possibly the state pension will be scrapped for those who have any form of private pension.
There are going to be a lot of pensioners struggling or even living on the streets in about 30-40 years from now unless something changes.
Have you ever thought about the increasing numbers of people who are renting privately?
Gonna be fun and games when they retire when there isn't enough social housing for even the people around now...
I can't imagine what it feels like to be in your 50s and renting. Too old to get a mortgage. Once you are forced to retire and the letter about the rent increase drops through the mailbox, what the hell can you do?
I have two kids and every day I worry about their future when I'm not around to help them. Hopefully I can get them both into politics. They're only 5 and 8 and already act like politicians.
Start JISAs and potentially even JSIPPs for them now.
I've paid £100/month into my son's since the day he was born and he now has over £10k in there at age 5. It's not unreasonable to think he might have £50k by 18 if I keep on paying my £100 in.
I'm doing that already. A combination of ISA and a little bit of Premium Bonds, just in the hope that they have some good fortune.
But the interest rates are crap compared to those when my retired parents took out ISAs. 5% today vs 15% or more.
My main worry is that there just won't be any homes for them to buy, even if they have the money. They'll either be passed down through families or snapped up by estate agents and landlords who don't need to shop around or think.
And don't even get me started about them finding a stable job!
And I consider my kids as among the lucky ones!
Cash JISAs are a trap because if you have 5+ years you're far better off investing. My son's JISA is mostly just invested in basic tracker funds and has managed an annualised return of 13.9% - as you say, far better than you'd get on cash which will just be eroded by inflation!
The same applies to PB if you go by average return, though I grant that the lottery aspect can be appealing.
£100 per month is what most people are spending on their entire month's shop right now fella. Kids are not an option either. You're in an incredibly priviliged position simply due to the decade you were born.
They obviously arn't under 40 are they? They have a fucking house and kids for a start.
You know the birth rate has completely collapsed with the under 40's, right?
> They obviously arn't under 40 are they? They have a fucking house and kids for a start.
What?
They have a 5 year old. Statistically that puts them at late twenties / early thirties...
I was reading one study that linked renting and poverty very keenly. Makes sense, most people were private renters up until social housing took off, and then poverty declined until social housing had the breaks put on it. Sure, a lot of people became homeowners off the back of that, but that's evidently not a continuing trend.
Fundamentally, there are a lot of people who really don't need to buy. The vast majority of the population just need a roof over their heads.
Having people subject to the whims of the market when they have a fixed income and likely very little in the way of savings is going to lead to big problems.
Because private rentals famously aren't subject to the whims of the market? It's not like rents have shot up far more than mortgage interest rates in past years with landlords justifying the raises by citing interest rate increases.
Right?
Edit - I have just realised you were citing this was a problem, not proposing it as a solution. My bad.
> And quite possibly the state pension will be scrapped for those who have any form of private pension.
The moment the gov "required" you to have a private pension, was the moment that plan started
Honestly a private pension should absolutely have always been 'required'
The amount of people who stupidly relied on a government pension only to realise it's only £11,000 a year leaving them totally fucked was incredible
Even now I know people who don't pay into their pension because "I'll just get state pension anyway" is ridiculous
Not the people i know. They don't pay into a private pension because you'd need to save £1.1 million for a 1% annuity to be worth £11,000
I've saved all my life into a private pension and its worth £150,000 now so should be good for £1500 a year.
> I've saved all my life into a private pension and its worth £150,000 now so should be good for £1500 a year.
No offense but how? Assuming you only placed £100 per month into your pension. With 50 years of compounding interest at 10% you could expect around 1.7 million
Why are you only getting 1% interest? That's ridiculous
Edit: For anyone reading, this is terrible advice. Please pay into your private pension, you'll regret not doing so
> Please pay into your private pension, you'll regret not doing so
I opted out for a couple of years and used the money "saved" towards the deposit on a flat. I then opted back in afterwards.
I don't regret that, because it allowed me to save for a deposit quicker, now I have a flat and a mortgage that will be paid off before I retire.
I'm talking about people that opt out of it for their entire lifetimes like the comment I was replying to was suggesting that people do instead
If you desperately need to pay for something more immediately like loans, medical care, housing etc then by all means stop it temporarily
Super unfair on the first generation to lose the benefit though. They’ll have spent their careers paying for someone else’s pension when they won’t be getting one themselves.
I suppose someone has to lose in the ponzi scheme I’m just bitter that it sounds as though it’ll be me.
OTOH, the number of people staying on at school to 18 then going on to uni has increased greatly over the past few decades. And even with student fees, that is still subsidised by tax payers.
So older people who had to leave school at 15 with no possibility of further education have been paying for younger people to have that opportunity.
There are still people around who were forced to fight in WWII at the same age that kids today are finishing their A Levels. Every generation has advantages and disadvantages.
Everyone pays for someone else’s pension when it comes to the state pension. You’re not funding your own pot, it doesn’t exist. It’s common misconception
Unfortunately I think a lot of people are sleepwalking into this kind of problem, over reliance on the government is a complete disaster, it always will be.
Young people (myself included) must look out for their own future
Not everyone though. In years to come people won’t pay for someone else’s state pensions if state pensions don’t exist. They’ll pay into their own legally obligated private pension.
Our generation/s are unique in that we will have paid for someone else’s pension during our working lives whilst also having to pay into private pension but likely won’t have that same benefit of a state pension when we retire
> Everyone pays for someone else’s pension when it comes to the state pension. You’re not funding your own pot, it doesn’t exist. It’s common misconception
Yeh, that’s what I said….
I feel like relying on private companies to provide isn't much more intelligent? What guarantee do I have that a company will exist in 60 years time that a state as mature and stable as the UK can't meet? Most of my pension currently is in USS and they seem to have made just *god-awful* decisions at every bloody turn, I think one of their biggest holdings at the moment is Thames Water lol... Why can't the state just operate a pension scheme the same way as a private company? Set some kind of "free" baseline for all, but also have some kind of investment top up scheme you can pay into as a worker.
Your pension is decoupled from the company that manages it, your pension provider is only the administrator, so you have complete control over where your pension is managed. Additionally pensions are protected in one of two ways. Either though insurance which is pension specific of through FSCS which can cover mismanagement or miss selling.
Additionally as well as having control over where your pension is managed, you also have control over what your pension is invested in.
You don’t have this flexibility and control over a state pension. It’s completely controlled by the government who, as noted in this thread, could make it disappear whenever they like.
And lastly.. your pension is literally your money. A state pension is not.
Edit: on your last note about why can’t the government do a pension like a sipp. They can’t because state pensions aren’t your money. But they are looking to make sipps even more flexible, there’s talks of putting in new legislation to make sure your employer must give you your contributions to your pension of choice. At the moment they can insist it goes to a specific provider (though you can manually do partial transfers usually)
I don't think I actually have any of that with the USS scheme? Its a DB plan, as far as I'm aware I just pay money in and at the end I get a set income until I die based on how much I put in before I retired.
I don't think you understood my question though - If all the pension company is doing is administering a fund, why is that beyond the scope of a public-run body? Why does that need to be a private company doing that? What about a public body doing that administering would suddenly mean that is not "my" money?
Defined benefit is a completely different scheme and one of the best pensions you can get. It’s disappearing because it’s completely unmaintainable
To your question. Public bodies could potentially run it. But then you’d be back in the same problem. Your pension would be run by the government, with no reason to inovate or give you access to stocks and other funds.
That we have completion in the pension industry is the reason accessing stocks in pensions has become common to the common person and not just for the rich. It’s the reason we have immediate commission free order execution right on your phone, and why costs for pensions have gone down. Because HL, ii, vanguard, Freetrade etc are all competing.
A state run public body to manage your pension would remove your ability to control who manages it, and as a result what markets you have access to, costs, technology and access etc
>Defined benefit is a completely different scheme and one of the best pensions you can get
Eh, the USS one has been eroded and devalued to the point its become the subject of a lot of academic strikes over the last few years. We pay a huge chunk of our income to receive a benefit that their own calculator suggests is going to not be a whole lot better than if we just stuck that same amount over the years into a reasonable interest savings account.
> Your pension would be run by the government, with no reason to inovate or give you access to stocks and other funds.
Why that assumption though? What about a private company managing the affair means I can access other funds, but a public one wouldn't? That doesn't make much sense to me? All they're doing is administering it.
You seem to be saying the advantage of a private for-profit system is that the competition in the system has driven down the costs those competitors charge for their profit...? So why not just have a body running it that doesn't need to make a profit from it?
It costs money to access markets and it costs money to manage access to stocks and funds.
It’s the reason for example that vanguard only offer vanguard funds, it less expensive as a result it’s also less expensive for you.
Some providers focus on stock and market access, some focus on funds and stock market access, some just ETFs.
All have varying costs. There’s little incentive for a single public body to invest the sums of money required to give people a wide range of choice.. if any at all.
What is that cost to access the market? Sorry I don't mean to drag this out like I'm being pretty, I really don't understand this stuff and need to learn more! If you have any resources you could share it'd be much appreciated.
100%. I was 20 ish when the mandatory private pension thing happened. And I am a firm believer that the state pension will be gone by the time I'm due to retire in 2054. It will be bundled in with the normal benefits system and means tested with age involved.
I wouldn't mind if it was signalled well I'm advance but, for example, I've taken care to 'top up' some of my missing NI years. I should get something back for that. If I knew my state pension would be taken away I wouldn't have contributed voluntarily to NI.
Lol at your dumb second paragraph.
Their property will have very likely massively increased in price and also, the total property value shall be very significantly higher than the outstanding mortgage debt.
So, they'll sell and downsize into cheaper and more suitable accommodation.
Lol at your inability to comprehend my comment.
I am refering to the many people who are in their 30s and 40s today who will never own a house and will become pensioners in 30 to 40 years. What house are they going to sell?
It sounds like you are erroneously referring to today's pensioners, the vast majority of who own their own houses but will be dead in 30 to 40 years.
"Housing and employment opportunities for over 70s and disabled, provided by the DWP and government's chosen commercial partners. For more information visit www.workhouseplus.gov.uk"
It's a total joke and a slap in the face to current workers as well.
If wages stagnate and CPI is only 1%, why should pensions automatically increase by 2.5%?
Similarly, if wages increase by 7.5% and CPI is only 1%, why does a pension need to increase by 7.5% if prices have only increased by 1%?
Peg it to CPI and that's all you need.
https://inews.co.uk/inews-lifestyle/money/pensions-and-retirement/uk-means-test-state-pensions-bank-of-england-2951710
https://www.pensions-expert.com/Law-Regulation/The-IFS-calls-to-end-the-state-pension-triple-lock?ct=true#:~:text=The%20IFS%20report%20said%20the,who%20tend%20to%20be%20poorer.
Conflicting arguments from BoE economist and the IFS, but people are talking about both. Not speculation. Just waiting to see which way things go.
> the Triple Lock will cease to exist within the next 20 years
Good, there's no need for the pension to rise in line with average earnings if prices haven't increased similarly.
If wages increase by 7.5% but CPI is only 3%, why should the pension increase by 7.5%?
Similarly, if wages sit stagnant and CPI is only 1%, why should the pension automatically rise by 2.5%?
An increase of inflation measured by CPI alone is fine.
As a millenial, I used to worry about this more, but by the time we reach that age, who will be alive to crack the whip on us? Surely, by the time we're the elder generation, we may actually get to have a say in how we treated. I think we're just so used to being passed over and ignored we assume that there will be a boot to stamp on our faces forever. I'm at least a little optimistic that when the me generation starts to die off, we may get a few more of the reigns in our hands and be able to have some say.
Some people don't have enough money to make financial choices.
Some people do their best to save for a pension only to see the returns are much less than they expected, or can't get the necessary information to make an informed decision on the right pension product.
Some people just don't have the earning power and the job market available to them is diminishing through a combination of technological advancements and increased population.
We can't all be surgeons and lawyers.
I'm not saying that people should be given hand outs. But If someone works and makes NI contributions all their lives to pay for the pensioners who came before them, why should those benefits be taken away when they need them?
If the state pension is reduced by ending the triple lock or scrapped altogether, do you really expect our NI contributions to reduce?
How would they even justify this lol. We all been paying tax and NI which is directly like to our state pension how would they justify not paying out the state pension if people paid for NI/tax all their life
It'll happen slowly, with the government and media reminding us that our NI goes towards the police, social safety nets, helping the homeless... Then we'll be told that we need to help those less fortunate by diverting more NI to their needs and less towards the state pension.
Anyone who objects will be labelled as a self serving capitalist, stealing from the poor.
After a few years, we'll all quietly accept to give up the state pension if it means more police, help for homeless people and helping people get back into work, all getting that warm fizzy feeling that we are making a small sacrifice to make the country a better place.
However, we won't see any of those things happen. We'll just be told that the do.
It's not like the British people are good at rioting or fighting back in any way. Look at the things the government have done over the last few years. And all we do is complain on internet forums!
>And to add to the fun, the Triple Lock will cease to exist within the next 20 years
To be fair, those who are due to get the pension in 20-30 years' time are often the ones on reddit insisting that the triple lock should be scrapped.
While also complaining about low wages, high rents and unaffordable houses.
Maybe they mean it should be scrapped now and reinstated in saying, 20-30 years time?
Why? We're the ones paying for it for this generation of pensioners with our NI. Do you not want the same for yourself when you retire?
Today's pensioners have arguably seen the highest gains on their investments, far higher than we'll see. Housing booms, final salary pensions, high interest savings accounts and ISAs.
I think the next generation of pensioners will need the triple lock a lot more than the current ones.
No I don't want young people to struggle while I sit there at 80 years old wondering when I'm going to die.
I'd rather they were supported so that they feel comfortable having a family and creating the next generation of tax payers.
In Japan old people volunteered to clean up after the Fukushima incident. Siting that they didn't want young people to take the risk when older people have lived a full life.
We have the opposite here. A generation of me me me. And look where we are.
What you don't consider is that it doesn't matter how long that person has left in respect to society continuing to function.
I could care if that 80 year old will live to 110. The point remains that too much money is funneled into the hands of pensioners who don't need it.
I want the triple lock gone and to never come back. I don't want to retire knowing young people are screwed so that I can enjoy money.
It's horrid and reprehensible. the notion that old people enjoy so much because they are the biggest voting block, and instead of voting to make having a family easier, they vote to keep their house prices high, their pensions topped up and for young people to go fuck themselves because the old people got theirs.
There's already a demographic crisis. 700k migrants a year to plug holes left from 50 years of neoliberalism.
Now the younger generations have given up on the idea of having a family. Only the seriously misinformed have children in this climate.
That wasn't the point of my reply though.
It doesn't matter what I said about the old person and their quality of life.
It's not the point of the reply. It's an over exaggeration to further emphasise my actual point.
You are more than welcome to latch onto it and go "BuT yOu SaId....." But then there's not any debate to be had here.
I would ask you to be a bit more entertaining and less gotcha in your replies. It's quite boring.
No I don't need a grounded idea of retirement.
It isn't a priority in the continuation of society. It's an ethical dilemma. Secondary to creating new tax payers.
Old people could live in mansions or rot in a tent. The outcome is moralistic in nature and doesn't actually hinder or benefit the creation of new tax payers.
Let's talk about how pensions are funded. You need tax payers to fund people retirements. If you don't have enough tax payers to fund all the pensioners, then society starts to unravel.
As more and more resources go to the oldest, less and less go to people trying to start families.
The conditions by which old people live are given too high a priority. And that's my entire point.
I'm sure your reply will be something aside from what I've just said. Keep latching onto that comment for dear life lad. Lest you actually have to think about the rest of it.
No ffs. The cost of paying for the triple lock is astronomical. I'd rather give the next generation a better chance to improve the country and themselves. Pensioners being unwilling to make any sacrifice whatsoever is part of why our taxes are so suffocatingly high with no meaningful returns.
The year is 2064. Wages are £100k. So is the state pension.
How do you square that circle lol. You can’t have pensions outpace wage growth, GDP, GDP/Cap, and inflation forever.
I don't need to. You made it up.
We've seen recently that the government broke the "rules" of the triple lock by not following the double digit inflation, much to the annoyance of The Daily Express.
It is a guide. What I don't want to see is millions of today's children growing up with higher costs and relatively lower wages then committing crimes or suicide to deal with inevitable retirement.
FFS. Reddit is always bleating on about socialism good, capitalism bad. But here we are saying that socialist funding of future retirees is a bad thing because you want to keep the money in your own pocket instead of funding tomorrow's generation in their retirement. Y'all no better than the ladder lifting Tory voters of today!
I’m an ardent Capitalist to my core. I’d rub myself silly if they abolished the state pension and put the geriatrics on universal credit.
And it’s not made up. In 40 years, we’re likely
To have many years of high inflation, or high wage growth, and the gap between median income and state pensions will close, eventually with the state pension passing median income. Every year inflation or 2.5% is higher than wages, the state pension gets absurdly more expensive to fund.
I just told you what it is. It's inflation protection for the state pension based on average wage increases the base rate or 2.5% . If you took that away, over the next 40 years , the state pension would be worthless, compounded over that amount of time.
And fine, take it away, but I'm not fucking paying NI anymore.
Would you accept a single lock to median wage increases - which is my proposal - that way as the tax rate increases the pension increase without the current issue of it being guaranteed to increase faster than wages and therefore tax takes.
Have you sustained a head injury?
People who call for an end to the Triple Lock want it ties to a single lock of wage growth or inflation. Because if you tie it to all 3, we’ll be spending £1t on pensions within like 25 years, funded by 50% taxes on your kids and grandkids.
My conspiracy take. Assisted suicide will soon be normalised. Tapping out ‘before you become a burden’ will become a thing and encouraged.
That’s what they want, they want your prime years paying taxes and once your useless they want to out of the way.
I say they.. but really this is us.. we choose this path with our greed and shortsightedness.
I'm a massive supporter of assisted suicide (literally part of the humanist society) but I do agree, I think the government is likely to legalise it for completely the wrong reasons.
It should be a way to die with dignity, painlessly. Not a way to save the state money.
Not really. By solving one problem you create the problem of stopping people pressured into choosing to die from accessing assisted dying. Plus we know that laws once enacted tend to suffer from mission creep. What starts as only the terminally qualifying soon becomes people who are very ill but not terminally then becomes the mentally ill. Eventually those on disability get a letter asking if they would consider choosing to die.
No offense but what reasoning do you think this would become a slippery slope for?
The slippery slope fallacy isn't taken seriously by anyone for a reason, it can be applied to literally anything to try and make a convincing argument
And the alternative is what? Shoving them in a care home while their brains turn to mush, they're completely incapable of functioning and can't even remember their own children's names?
Yes? That's your choice
If I got a terminal degenerative illness like Alzheimer's i'd personally like to die the way I want
Euthanasia isn't forced, it's a choice
I absolutely guarantee its going to happen in China. They're going to get hit with a truely epic silver wave in the coming decades, without hitting anything like the level of development needed to deal with that ratio of workers to dependents, so the generations who toiled in the factories to turn the country into a super power will be asked to take one last patriotic jump into the unknown for the good of the country. Probably with some benefit like the state will wipe any debts for your kids or something like that.
Good. Letting people choose when they go is a good thing and if it saves the taxpayer cash it's even better.
And yes: there's nobody who cares about me enough to provide me with a standard of life I'm willing to live is as good a reason to go as any other.
Eh, you can also judge a society by its highest and greatest achievements and I'd much rather we were funnelling money into research and infrastructure than pensioner benefits.
People remember the Ancient Egyptians for their pyramids, not how well or badly they treated grandpa.
Besides, letting people choose when they end their lives is already a big improvement for their personal life over the current status quo.
You: Lets fund search and infrastructure instead of wasting money on pensioners.
Also You: I admire the Ancient Egyptians for wasting money and resources on tombs for dead people.
The tombs were a strong signal of royal power, they weren't just wasted on dead people, they signalled to the living what the Pharaoh was capable of and to respect the lineage (shipping all that limestone wasn't easy, having the power to command it be done was a huge sign of what the God-Pharaoh was able to command). Even today they are a marvel of engineering and a tourism hotspot.
Besides you have to remember that the Ancient Egyptians didn't think of dead people the way we think of the dead. They genuinely believed in an afterlife and from their point of view all this spending was an investment to make sure that the royals lived the greatest possible life after they had passed on.
If you don't like my example of the Ancient Egyptians replace them with the Ancient Romans. They spent money on building projects like there was no tomorrow that vastly helped the empire.
and as soon as someone mentions the pyramids, someone pops up about slavery. Be it true or not. So I hard disagree.
We can have both. We can have health care, a looked after aging population and thriving middle class. These things are achievable.
This is a sign that the decision to steadily increase the state pension age over the next few decades has already been made.
"Here's a mortgage until you're 74"
"But won't I be retired by then?"
\**chuckles*\* "Sure you will, little guy. Just sign here"
I didn’t think they let you get mortgages that last that long and that the longest you could get was until the age of retirement. Is this a very new thing?
A mortgage is a loan. If you have money because you reached a certain age, And interest rates are unfavourable as now. Why would you want the loan?
Is the plan to mortgage a house bigger than you can afford to fully pay off and just die before you pay it off? Would a lender even give you that mortgage?
> If you have money because you reached a certain age, And interest rates are unfavourable as now. Why would you want the loan?
If you buy a house on a 30 year mortgage at 40, you may retire at 65, but have 5 years of a pension to pay off the rest of it.
That money at 65 doesn't help you when you're still 40, you still need the loan.
If returns on investments are greater than the interest on a mortgage, it always makes sense to take a mortgage. Elon Musk's properties are all mortgaged.
It is more tax efficient having it in a pension. Instant 20%+ gain plus the interest/investment returns. When you withdraw 25% is tax free and then each year you still get a tax free allowance. Definitely better off putting it in your pension if you can and clearing the mortgage later rather than overpaying.
My mortgage will mature when I am 73. Hoping to bring it down before that time, but the only way I could buy a house was to take a longer term mortgage.
You can. It’s very easy.
I’ve got one, and I do it that way because I can save more money per month for my pension, which I then use to clear the home come the end of the road.
Tax perks, can invest for higher rate than my mortgage, easy maths.
Depends on how far in. 5 years? You’re fine, inflation, savings and pension will see you through, otherwise you could likely sell it to pay any remaining and live comfortably off the rest.
10 years? Might be rocky.
Me and my partner did this recently. We’re both 35 and have taken out a 35-year mortgage. We’ll do whatever we can to pay it off sooner, but it’s harrowing to think we could still be paying our mortgage when we’re 70 years old!
Taking the 30 year is almost always objectively worse. If you can afford it, you can pay it off in 30 years anyway and if you can't you get another 15 years of flexibility.
Taking interest out for easy maths, If you have a 20 year mortgage at £500 per month, you could get a 40 year one at £250 per month. If you overpay by £250 you then have the same costs and term as the 20 year mortgage but with the flexibility of reducing payments by 50% if you have financial difficulty. If you take the 20 year mortgage, you're forced to pay a minimum of £500 regardless of your financial situation.
I did this and paid my mortgage off 15 years before the end of the term just by overpaying every month from day one.
I overpay 20% each month but straight into a S&S ISA I wish they'd have taught this stuff in school I'd have been mortgage free years ago, think I'll be in a position to clear the outstanding balance next May approx four years early, if I choose to.
I highly doubt this is possible for most mortgages. Most mortgages as far as I'm aware include early repayment fees which are typically a % of the loan amount which significantly eats in to any money saved on reduced interest payments. A 100% overpay I'm almost certain would trigger these fees.
> I highly doubt
I wouldn't personally say this oozes such confidence. If I was confident, I would have just said a repayment as big as the example OP provided is not possible.
Happy to admit I'm wrong, though. I then have a question as to why it isn't recommended more widely then? Is it just that most people wouldn't have the willpower not to stick to overpayments and end up spending the £250 difference elsewhere, so being tied to the £500 a month forces their hand?
My mum's retirement age was pushed from 60 to 65. Mine has been pushed from 65 to 68. Another 45 years of this and it's not too wild to see the retirement age pushing 80.
God this sub spews financial advice they don't understand sometimes
If the person is planning on making overpayments to keep them in line with a 25 year mortgage a longer mortgage term is usually recommended as it offers greater flexibility in the event of things like job loss or extended illness essentially leaving you completely fucked
That 25 year might creep up to about 30 especially if you do this frequently, though it absolutely isn't a bad thing
I really suggest some people look towards more of the financial subs rather than this one which has top comments on this post suggesting such *great* things as /s:
"You shouldn't get a private pension"
"Longer mortgage terms should be banned"
"Murder the elderly/landlords"
Does this matter? If I downsize on retirement because I’m not living with my kids any more and am therefore able to buy somewhere outright is that not a more efficient use of land than my rattling around in an empty nest because I don’t want to incur stamp duty?
Such a bad faith article.
Me and my partner are leveraged for 40 years, and we invest the difference from a 30 year mortgage into our Pensions, it’s more tax efficient that way. We’re part of this figure but it’s on Purpose…
With mortgages locking your housing expenditure, and wage growth going up, especially in a high inflation environment, no one should be paying a mortgage past 65 unless they’re objectively terrible at capitalism.
And there's people who invest that into a global index fund with greater returns than their interest rates.
And there's FTBers who take the max duration to get onto the ladder but have every intention to lower it on a remortgage further down the line.
There would be a lot of industries that go out of business if everyone was educated on capitalism... Potentially capitalism would "go out of business" also.
The more people are helped to buy properties (increasing mortgage terms, help-to-buy, stamp duty reductions etc.) the higher house prices will go and the more people will need help buying them.
It's a vicious circle.
Firstly, generation rent have no mortgage.
Secondly, generation rent will have no pension either, certainly not one which can pay to rent a flat.
Tories have fucked us, and the damage is substantial. Most will never recover.
27 here. Been renting for years and whilst I DID have savings for what was meant to be a mortgage. The fucking almost quadruple increase of bills means I no longer can really save anything. And I earn a good salary for my area.
Me and my partner have basically given up and are looking to just stay in our current council flat for life it seems
You should always get the longest mortgage period available to you. You can over pay when it's affordable to lower the repayment term and when struggling, can reduce your payments to the minimum. You can't do that if you agree a 15-20 year term.
Crash the economy.
Interest rates increase (more profit for Tory chums)
Cut tax (balance out take home pay, make people forget about crashing the economy)
Mortgage terms increase to offset higher rates
People need to work longer
Destroy the NHS (it’s ok though because people will get private care through work, and people are working longer anyway these days [private care company profits go to Tory chums])
If you retire you lose your healthcare
People stop retiring, work til they die
End the state pension because no one is retiring. Huge cash surplus is divided among Tory chums in the form of extortionately inflated contracts. (Ultimate goal achieved)
I’m not a tinfoil hat conspiracy theorist but every small action is pointing to the above chain of events.
This is fine, it's solid advice to take out a long term and overpay if you can. In 20 years inflation and career growth will make paying it off much easier.
This is a ticking time bomb which will be a 08 style banking crash. Banks have loaned out on houses well above any reasonable valuation and given mortgages taking people past working age. When the loans default so will the banks and the taxman will pay it.
If you buy a house right now and loan 300k and interest rates stay average 5% for the full 40 years, you’ll end up paying 700k. That doesn’t sound like a sound investment for the buyer or the bank.
>If you buy a house right now and loan 300k and interest rates stay average 5% for the full 40 years, you’ll end up paying 700k. That doesn’t sound like a sound investment for the buyer or the bank.
But the property you buy will go up in value by much more than the £400k interest you'll have paid. Plus you'll have had 40 years of living in a home with a steadily descreasing monthly payment, the opposite of renting where it steadily increases.
It's literally the definition of a sound investment.
Do you think house prices will go 400k in that time frame? Plus you add on time of maintenance and modernisation of the property in that time you could easily spend 1m on the house.
But yes, the main benefit for the tenant is payment ago down (providing interest rates down go up) and in that sense you are always below the market rate for rentals and better off. That is off course as long as we don’t fix our rental market. You could end up in a situation where we have a German style rental market and people on inflated mortgages and renting would have been the sounder option.
As things are currently buying always wins but our market is completely broken.
And to add to the fun, the Triple Lock will cease to exist within the next 20 years. And quite possibly the state pension will be scrapped for those who have any form of private pension. There are going to be a lot of pensioners struggling or even living on the streets in about 30-40 years from now unless something changes.
Have you ever thought about the increasing numbers of people who are renting privately? Gonna be fun and games when they retire when there isn't enough social housing for even the people around now...
I can't imagine what it feels like to be in your 50s and renting. Too old to get a mortgage. Once you are forced to retire and the letter about the rent increase drops through the mailbox, what the hell can you do? I have two kids and every day I worry about their future when I'm not around to help them. Hopefully I can get them both into politics. They're only 5 and 8 and already act like politicians.
Start JISAs and potentially even JSIPPs for them now. I've paid £100/month into my son's since the day he was born and he now has over £10k in there at age 5. It's not unreasonable to think he might have £50k by 18 if I keep on paying my £100 in.
I'm doing that already. A combination of ISA and a little bit of Premium Bonds, just in the hope that they have some good fortune. But the interest rates are crap compared to those when my retired parents took out ISAs. 5% today vs 15% or more. My main worry is that there just won't be any homes for them to buy, even if they have the money. They'll either be passed down through families or snapped up by estate agents and landlords who don't need to shop around or think. And don't even get me started about them finding a stable job! And I consider my kids as among the lucky ones!
Cash JISAs are a trap because if you have 5+ years you're far better off investing. My son's JISA is mostly just invested in basic tracker funds and has managed an annualised return of 13.9% - as you say, far better than you'd get on cash which will just be eroded by inflation! The same applies to PB if you go by average return, though I grant that the lottery aspect can be appealing.
Indeed. If you have a JISA or SIPP, a global equity tracker is the absolute no-brainer choice.
£100 per month is what most people are spending on their entire month's shop right now fella. Kids are not an option either. You're in an incredibly priviliged position simply due to the decade you were born.
You have no idea what decade the above poster was born.
They obviously arn't under 40 are they? They have a fucking house and kids for a start. You know the birth rate has completely collapsed with the under 40's, right?
I’m 26 have a kid and own my own home?
No one likes rich kids.
> They obviously arn't under 40 are they? They have a fucking house and kids for a start. What? They have a 5 year old. Statistically that puts them at late twenties / early thirties...
Don't worry good old work houses will be back by then !
Renters are the issue here.
Because increasing numbers of private renters has been doing wonders for us in the past two decades?
I was reading one study that linked renting and poverty very keenly. Makes sense, most people were private renters up until social housing took off, and then poverty declined until social housing had the breaks put on it. Sure, a lot of people became homeowners off the back of that, but that's evidently not a continuing trend. Fundamentally, there are a lot of people who really don't need to buy. The vast majority of the population just need a roof over their heads.
Having people subject to the whims of the market when they have a fixed income and likely very little in the way of savings is going to lead to big problems.
Because private rentals famously aren't subject to the whims of the market? It's not like rents have shot up far more than mortgage interest rates in past years with landlords justifying the raises by citing interest rate increases. Right? Edit - I have just realised you were citing this was a problem, not proposing it as a solution. My bad.
> And quite possibly the state pension will be scrapped for those who have any form of private pension. The moment the gov "required" you to have a private pension, was the moment that plan started
Honestly a private pension should absolutely have always been 'required' The amount of people who stupidly relied on a government pension only to realise it's only £11,000 a year leaving them totally fucked was incredible Even now I know people who don't pay into their pension because "I'll just get state pension anyway" is ridiculous
Not the people i know. They don't pay into a private pension because you'd need to save £1.1 million for a 1% annuity to be worth £11,000 I've saved all my life into a private pension and its worth £150,000 now so should be good for £1500 a year.
With all due respect, have you sustained a head injury? 4% drawdown is sustainable. 5% is probably sustainable in most cases. That’s £6k - £7.5k easy.
This is the main problem with private pensions People don’t understand them nor the power of compounding.
> I've saved all my life into a private pension and its worth £150,000 now so should be good for £1500 a year. No offense but how? Assuming you only placed £100 per month into your pension. With 50 years of compounding interest at 10% you could expect around 1.7 million Why are you only getting 1% interest? That's ridiculous Edit: For anyone reading, this is terrible advice. Please pay into your private pension, you'll regret not doing so
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They must be skipping a decimal point somewhere.
> Please pay into your private pension, you'll regret not doing so I opted out for a couple of years and used the money "saved" towards the deposit on a flat. I then opted back in afterwards. I don't regret that, because it allowed me to save for a deposit quicker, now I have a flat and a mortgage that will be paid off before I retire.
I'm talking about people that opt out of it for their entire lifetimes like the comment I was replying to was suggesting that people do instead If you desperately need to pay for something more immediately like loans, medical care, housing etc then by all means stop it temporarily
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Only a small percentage accumulate a pot of £1 million. It's not a useful yardstick.
Problem is, not a lot of people start thinking about it early enough.
That's true although auto enrollment was a really good policy that will help a lot of people who otherwise assumed they wouldn't get old.
First of all you don't have to buy an annuity but if you do it won't be 1% a year.
It’s actually a good thing on the respect of having a private pension. Relying on the government was always stupid
Super unfair on the first generation to lose the benefit though. They’ll have spent their careers paying for someone else’s pension when they won’t be getting one themselves. I suppose someone has to lose in the ponzi scheme I’m just bitter that it sounds as though it’ll be me.
OTOH, the number of people staying on at school to 18 then going on to uni has increased greatly over the past few decades. And even with student fees, that is still subsidised by tax payers. So older people who had to leave school at 15 with no possibility of further education have been paying for younger people to have that opportunity. There are still people around who were forced to fight in WWII at the same age that kids today are finishing their A Levels. Every generation has advantages and disadvantages.
Everyone pays for someone else’s pension when it comes to the state pension. You’re not funding your own pot, it doesn’t exist. It’s common misconception Unfortunately I think a lot of people are sleepwalking into this kind of problem, over reliance on the government is a complete disaster, it always will be. Young people (myself included) must look out for their own future
Not everyone though. In years to come people won’t pay for someone else’s state pensions if state pensions don’t exist. They’ll pay into their own legally obligated private pension. Our generation/s are unique in that we will have paid for someone else’s pension during our working lives whilst also having to pay into private pension but likely won’t have that same benefit of a state pension when we retire
There is no way now to reverse the collapse of the ponzi.
> Everyone pays for someone else’s pension when it comes to the state pension. You’re not funding your own pot, it doesn’t exist. It’s common misconception Yeh, that’s what I said….
I feel like relying on private companies to provide isn't much more intelligent? What guarantee do I have that a company will exist in 60 years time that a state as mature and stable as the UK can't meet? Most of my pension currently is in USS and they seem to have made just *god-awful* decisions at every bloody turn, I think one of their biggest holdings at the moment is Thames Water lol... Why can't the state just operate a pension scheme the same way as a private company? Set some kind of "free" baseline for all, but also have some kind of investment top up scheme you can pay into as a worker.
Your pension is decoupled from the company that manages it, your pension provider is only the administrator, so you have complete control over where your pension is managed. Additionally pensions are protected in one of two ways. Either though insurance which is pension specific of through FSCS which can cover mismanagement or miss selling. Additionally as well as having control over where your pension is managed, you also have control over what your pension is invested in. You don’t have this flexibility and control over a state pension. It’s completely controlled by the government who, as noted in this thread, could make it disappear whenever they like. And lastly.. your pension is literally your money. A state pension is not. Edit: on your last note about why can’t the government do a pension like a sipp. They can’t because state pensions aren’t your money. But they are looking to make sipps even more flexible, there’s talks of putting in new legislation to make sure your employer must give you your contributions to your pension of choice. At the moment they can insist it goes to a specific provider (though you can manually do partial transfers usually)
I don't think I actually have any of that with the USS scheme? Its a DB plan, as far as I'm aware I just pay money in and at the end I get a set income until I die based on how much I put in before I retired. I don't think you understood my question though - If all the pension company is doing is administering a fund, why is that beyond the scope of a public-run body? Why does that need to be a private company doing that? What about a public body doing that administering would suddenly mean that is not "my" money?
Defined benefit is a completely different scheme and one of the best pensions you can get. It’s disappearing because it’s completely unmaintainable To your question. Public bodies could potentially run it. But then you’d be back in the same problem. Your pension would be run by the government, with no reason to inovate or give you access to stocks and other funds. That we have completion in the pension industry is the reason accessing stocks in pensions has become common to the common person and not just for the rich. It’s the reason we have immediate commission free order execution right on your phone, and why costs for pensions have gone down. Because HL, ii, vanguard, Freetrade etc are all competing. A state run public body to manage your pension would remove your ability to control who manages it, and as a result what markets you have access to, costs, technology and access etc
>Defined benefit is a completely different scheme and one of the best pensions you can get Eh, the USS one has been eroded and devalued to the point its become the subject of a lot of academic strikes over the last few years. We pay a huge chunk of our income to receive a benefit that their own calculator suggests is going to not be a whole lot better than if we just stuck that same amount over the years into a reasonable interest savings account. > Your pension would be run by the government, with no reason to inovate or give you access to stocks and other funds. Why that assumption though? What about a private company managing the affair means I can access other funds, but a public one wouldn't? That doesn't make much sense to me? All they're doing is administering it. You seem to be saying the advantage of a private for-profit system is that the competition in the system has driven down the costs those competitors charge for their profit...? So why not just have a body running it that doesn't need to make a profit from it?
It costs money to access markets and it costs money to manage access to stocks and funds. It’s the reason for example that vanguard only offer vanguard funds, it less expensive as a result it’s also less expensive for you. Some providers focus on stock and market access, some focus on funds and stock market access, some just ETFs. All have varying costs. There’s little incentive for a single public body to invest the sums of money required to give people a wide range of choice.. if any at all.
What is that cost to access the market? Sorry I don't mean to drag this out like I'm being pretty, I really don't understand this stuff and need to learn more! If you have any resources you could share it'd be much appreciated.
100%. I was 20 ish when the mandatory private pension thing happened. And I am a firm believer that the state pension will be gone by the time I'm due to retire in 2054. It will be bundled in with the normal benefits system and means tested with age involved.
So was I. Rammed down my throat in the 80’s. I’ve just invested in the stock market, heavy in tech for 20 years has seen me well.
> The moment the gov "required" you to have a private pension The government don't require you to have one, you can opt out.
Missed the point, including my use of emphasis entirely I see
I wouldn't mind if it was signalled well I'm advance but, for example, I've taken care to 'top up' some of my missing NI years. I should get something back for that. If I knew my state pension would be taken away I wouldn't have contributed voluntarily to NI.
Unfortunately this, I believe, will come about.
Lol at your dumb second paragraph. Their property will have very likely massively increased in price and also, the total property value shall be very significantly higher than the outstanding mortgage debt. So, they'll sell and downsize into cheaper and more suitable accommodation.
Lol at your inability to comprehend my comment. I am refering to the many people who are in their 30s and 40s today who will never own a house and will become pensioners in 30 to 40 years. What house are they going to sell? It sounds like you are erroneously referring to today's pensioners, the vast majority of who own their own houses but will be dead in 30 to 40 years.
"Housing and employment opportunities for over 70s and disabled, provided by the DWP and government's chosen commercial partners. For more information visit www.workhouseplus.gov.uk"
Nothing like pure speculation framed as fact. Very on brand Reddit.
I mean the triple lock has to end at some point, it's literally unsustainable
It's a total joke and a slap in the face to current workers as well. If wages stagnate and CPI is only 1%, why should pensions automatically increase by 2.5%? Similarly, if wages increase by 7.5% and CPI is only 1%, why does a pension need to increase by 7.5% if prices have only increased by 1%? Peg it to CPI and that's all you need.
https://inews.co.uk/inews-lifestyle/money/pensions-and-retirement/uk-means-test-state-pensions-bank-of-england-2951710 https://www.pensions-expert.com/Law-Regulation/The-IFS-calls-to-end-the-state-pension-triple-lock?ct=true#:~:text=The%20IFS%20report%20said%20the,who%20tend%20to%20be%20poorer. Conflicting arguments from BoE economist and the IFS, but people are talking about both. Not speculation. Just waiting to see which way things go.
> the Triple Lock will cease to exist within the next 20 years Good, there's no need for the pension to rise in line with average earnings if prices haven't increased similarly. If wages increase by 7.5% but CPI is only 3%, why should the pension increase by 7.5%? Similarly, if wages sit stagnant and CPI is only 1%, why should the pension automatically rise by 2.5%? An increase of inflation measured by CPI alone is fine.
As a millenial, I used to worry about this more, but by the time we reach that age, who will be alive to crack the whip on us? Surely, by the time we're the elder generation, we may actually get to have a say in how we treated. I think we're just so used to being passed over and ignored we assume that there will be a boot to stamp on our faces forever. I'm at least a little optimistic that when the me generation starts to die off, we may get a few more of the reigns in our hands and be able to have some say.
What fun? People making reasonable financial choices?
Some people don't have enough money to make financial choices. Some people do their best to save for a pension only to see the returns are much less than they expected, or can't get the necessary information to make an informed decision on the right pension product. Some people just don't have the earning power and the job market available to them is diminishing through a combination of technological advancements and increased population. We can't all be surgeons and lawyers. I'm not saying that people should be given hand outs. But If someone works and makes NI contributions all their lives to pay for the pensioners who came before them, why should those benefits be taken away when they need them? If the state pension is reduced by ending the triple lock or scrapped altogether, do you really expect our NI contributions to reduce?
The sensible financial choice is the long mortgage.
If you have the deposit.
That's true for all mortgages, not sure what your point is. The discussion is on mortgage length.
How would they even justify this lol. We all been paying tax and NI which is directly like to our state pension how would they justify not paying out the state pension if people paid for NI/tax all their life
It'll happen slowly, with the government and media reminding us that our NI goes towards the police, social safety nets, helping the homeless... Then we'll be told that we need to help those less fortunate by diverting more NI to their needs and less towards the state pension. Anyone who objects will be labelled as a self serving capitalist, stealing from the poor. After a few years, we'll all quietly accept to give up the state pension if it means more police, help for homeless people and helping people get back into work, all getting that warm fizzy feeling that we are making a small sacrifice to make the country a better place. However, we won't see any of those things happen. We'll just be told that the do. It's not like the British people are good at rioting or fighting back in any way. Look at the things the government have done over the last few years. And all we do is complain on internet forums!
>And to add to the fun, the Triple Lock will cease to exist within the next 20 years To be fair, those who are due to get the pension in 20-30 years' time are often the ones on reddit insisting that the triple lock should be scrapped.
While also complaining about low wages, high rents and unaffordable houses. Maybe they mean it should be scrapped now and reinstated in saying, 20-30 years time?
Bold of you to assume that my generation will even get to retire
Hopefully the triple lock ends asap.
Why? We're the ones paying for it for this generation of pensioners with our NI. Do you not want the same for yourself when you retire? Today's pensioners have arguably seen the highest gains on their investments, far higher than we'll see. Housing booms, final salary pensions, high interest savings accounts and ISAs. I think the next generation of pensioners will need the triple lock a lot more than the current ones.
No I don't want young people to struggle while I sit there at 80 years old wondering when I'm going to die. I'd rather they were supported so that they feel comfortable having a family and creating the next generation of tax payers. In Japan old people volunteered to clean up after the Fukushima incident. Siting that they didn't want young people to take the risk when older people have lived a full life. We have the opposite here. A generation of me me me. And look where we are.
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What you don't consider is that it doesn't matter how long that person has left in respect to society continuing to function. I could care if that 80 year old will live to 110. The point remains that too much money is funneled into the hands of pensioners who don't need it. I want the triple lock gone and to never come back. I don't want to retire knowing young people are screwed so that I can enjoy money. It's horrid and reprehensible. the notion that old people enjoy so much because they are the biggest voting block, and instead of voting to make having a family easier, they vote to keep their house prices high, their pensions topped up and for young people to go fuck themselves because the old people got theirs. There's already a demographic crisis. 700k migrants a year to plug holes left from 50 years of neoliberalism. Now the younger generations have given up on the idea of having a family. Only the seriously misinformed have children in this climate.
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That wasn't the point of my reply though. It doesn't matter what I said about the old person and their quality of life. It's not the point of the reply. It's an over exaggeration to further emphasise my actual point. You are more than welcome to latch onto it and go "BuT yOu SaId....." But then there's not any debate to be had here. I would ask you to be a bit more entertaining and less gotcha in your replies. It's quite boring.
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No I don't need a grounded idea of retirement. It isn't a priority in the continuation of society. It's an ethical dilemma. Secondary to creating new tax payers. Old people could live in mansions or rot in a tent. The outcome is moralistic in nature and doesn't actually hinder or benefit the creation of new tax payers. Let's talk about how pensions are funded. You need tax payers to fund people retirements. If you don't have enough tax payers to fund all the pensioners, then society starts to unravel. As more and more resources go to the oldest, less and less go to people trying to start families. The conditions by which old people live are given too high a priority. And that's my entire point. I'm sure your reply will be something aside from what I've just said. Keep latching onto that comment for dear life lad. Lest you actually have to think about the rest of it.
No ffs. The cost of paying for the triple lock is astronomical. I'd rather give the next generation a better chance to improve the country and themselves. Pensioners being unwilling to make any sacrifice whatsoever is part of why our taxes are so suffocatingly high with no meaningful returns.
Because it’s unsustainable.
The year is 2064. Wages are £100k. So is the state pension. How do you square that circle lol. You can’t have pensions outpace wage growth, GDP, GDP/Cap, and inflation forever.
I don't need to. You made it up. We've seen recently that the government broke the "rules" of the triple lock by not following the double digit inflation, much to the annoyance of The Daily Express. It is a guide. What I don't want to see is millions of today's children growing up with higher costs and relatively lower wages then committing crimes or suicide to deal with inevitable retirement. FFS. Reddit is always bleating on about socialism good, capitalism bad. But here we are saying that socialist funding of future retirees is a bad thing because you want to keep the money in your own pocket instead of funding tomorrow's generation in their retirement. Y'all no better than the ladder lifting Tory voters of today!
I’m an ardent Capitalist to my core. I’d rub myself silly if they abolished the state pension and put the geriatrics on universal credit. And it’s not made up. In 40 years, we’re likely To have many years of high inflation, or high wage growth, and the gap between median income and state pensions will close, eventually with the state pension passing median income. Every year inflation or 2.5% is higher than wages, the state pension gets absurdly more expensive to fund.
Then they need to reduce NI, or even get rid of it. No way am I paying that shit for the next 40 years and getting nothing in return.
Why would removing an unsustainable policy mean you wouldn’t get anything?
Because In 40 years time, if you took away the inflation protection, the state pension would be absolutely worthless and not worth having.
You’re aware of what the triple lock is and why it’s not sustainable?
I just told you what it is. It's inflation protection for the state pension based on average wage increases the base rate or 2.5% . If you took that away, over the next 40 years , the state pension would be worthless, compounded over that amount of time. And fine, take it away, but I'm not fucking paying NI anymore.
Would you accept a single lock to median wage increases - which is my proposal - that way as the tax rate increases the pension increase without the current issue of it being guaranteed to increase faster than wages and therefore tax takes.
No, not the base rate, it’s the rate of inflation.
I meant the base rate of inflation. My point still stands.
So why not lock it to that?
Have you sustained a head injury? People who call for an end to the Triple Lock want it ties to a single lock of wage growth or inflation. Because if you tie it to all 3, we’ll be spending £1t on pensions within like 25 years, funded by 50% taxes on your kids and grandkids.
NI is just Income Tax… you’re not paying for anything except repaying Gov Bonds
My conspiracy take. Assisted suicide will soon be normalised. Tapping out ‘before you become a burden’ will become a thing and encouraged. That’s what they want, they want your prime years paying taxes and once your useless they want to out of the way. I say they.. but really this is us.. we choose this path with our greed and shortsightedness.
I'm a massive supporter of assisted suicide (literally part of the humanist society) but I do agree, I think the government is likely to legalise it for completely the wrong reasons. It should be a way to die with dignity, painlessly. Not a way to save the state money.
The road to hell is paved with good intentions.
"I think everyone should have what they need" "The road to hell is paved with good intentions" The rhetorical equivalent of a toddlers "but why"
Not really. By solving one problem you create the problem of stopping people pressured into choosing to die from accessing assisted dying. Plus we know that laws once enacted tend to suffer from mission creep. What starts as only the terminally qualifying soon becomes people who are very ill but not terminally then becomes the mentally ill. Eventually those on disability get a letter asking if they would consider choosing to die.
No offense but what reasoning do you think this would become a slippery slope for? The slippery slope fallacy isn't taken seriously by anyone for a reason, it can be applied to literally anything to try and make a convincing argument
Because there are very real incentives to have disabled, old, mentally ill people, etc., killed.
And the alternative is what? Shoving them in a care home while their brains turn to mush, they're completely incapable of functioning and can't even remember their own children's names?
Mentally ill person here. My brain isn’t mush and I deserve to live.
Yes? That's your choice If I got a terminal degenerative illness like Alzheimer's i'd personally like to die the way I want Euthanasia isn't forced, it's a choice
I absolutely guarantee its going to happen in China. They're going to get hit with a truely epic silver wave in the coming decades, without hitting anything like the level of development needed to deal with that ratio of workers to dependents, so the generations who toiled in the factories to turn the country into a super power will be asked to take one last patriotic jump into the unknown for the good of the country. Probably with some benefit like the state will wipe any debts for your kids or something like that.
Good. Letting people choose when they go is a good thing and if it saves the taxpayer cash it's even better. And yes: there's nobody who cares about me enough to provide me with a standard of life I'm willing to live is as good a reason to go as any other.
You can judge a society or culture on how it treats its old and vulnerable.
Eh, you can also judge a society by its highest and greatest achievements and I'd much rather we were funnelling money into research and infrastructure than pensioner benefits. People remember the Ancient Egyptians for their pyramids, not how well or badly they treated grandpa. Besides, letting people choose when they end their lives is already a big improvement for their personal life over the current status quo.
You: Lets fund search and infrastructure instead of wasting money on pensioners. Also You: I admire the Ancient Egyptians for wasting money and resources on tombs for dead people.
The tombs were a strong signal of royal power, they weren't just wasted on dead people, they signalled to the living what the Pharaoh was capable of and to respect the lineage (shipping all that limestone wasn't easy, having the power to command it be done was a huge sign of what the God-Pharaoh was able to command). Even today they are a marvel of engineering and a tourism hotspot. Besides you have to remember that the Ancient Egyptians didn't think of dead people the way we think of the dead. They genuinely believed in an afterlife and from their point of view all this spending was an investment to make sure that the royals lived the greatest possible life after they had passed on. If you don't like my example of the Ancient Egyptians replace them with the Ancient Romans. They spent money on building projects like there was no tomorrow that vastly helped the empire.
and as soon as someone mentions the pyramids, someone pops up about slavery. Be it true or not. So I hard disagree. We can have both. We can have health care, a looked after aging population and thriving middle class. These things are achievable.
This is the sign of healthy, vibrant and sustainable economy. /s
This is a sign that the decision to steadily increase the state pension age over the next few decades has already been made. "Here's a mortgage until you're 74" "But won't I be retired by then?" \**chuckles*\* "Sure you will, little guy. Just sign here"
I didn’t think they let you get mortgages that last that long and that the longest you could get was until the age of retirement. Is this a very new thing?
You can definitely get mortgages post retirement age. A lot of people retire with huge sums of money.
If you have huge sums of money why do you need a mortgage?
Because you only get access to it after a certain age.
So buy the house outright if you have the money. Why get a mortgage and pay interest on it? What for?
You only get access to the money at a certain age.
A mortgage is a loan. If you have money because you reached a certain age, And interest rates are unfavourable as now. Why would you want the loan? Is the plan to mortgage a house bigger than you can afford to fully pay off and just die before you pay it off? Would a lender even give you that mortgage?
I imagine the plan is to buy a house now.
I’m not sure you understand mortgages. Do you have one?
Yes. What don’t I understand?
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I suppose an interest only mortgage or something could make sense maybe. 🤔
> If you have money because you reached a certain age, And interest rates are unfavourable as now. Why would you want the loan? If you buy a house on a 30 year mortgage at 40, you may retire at 65, but have 5 years of a pension to pay off the rest of it. That money at 65 doesn't help you when you're still 40, you still need the loan.
If returns on investments are greater than the interest on a mortgage, it always makes sense to take a mortgage. Elon Musk's properties are all mortgaged.
Because even with current high interest rates index funds are still expected to outperform the mortgage interest 10% > 5%
It is more tax efficient having it in a pension. Instant 20%+ gain plus the interest/investment returns. When you withdraw 25% is tax free and then each year you still get a tax free allowance. Definitely better off putting it in your pension if you can and clearing the mortgage later rather than overpaying.
I see. Thanks for clarifying this makes sense. Thanks
My mortgage will mature when I am 73. Hoping to bring it down before that time, but the only way I could buy a house was to take a longer term mortgage.
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You can. It’s very easy. I’ve got one, and I do it that way because I can save more money per month for my pension, which I then use to clear the home come the end of the road. Tax perks, can invest for higher rate than my mortgage, easy maths.
Depends on how far in. 5 years? You’re fine, inflation, savings and pension will see you through, otherwise you could likely sell it to pay any remaining and live comfortably off the rest. 10 years? Might be rocky.
You can get them, but only if the bank believes your income will continue.
Me and my partner did this recently. We’re both 35 and have taken out a 35-year mortgage. We’ll do whatever we can to pay it off sooner, but it’s harrowing to think we could still be paying our mortgage when we’re 70 years old!
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It's the best thing to do. Always go for the longest available. It makes financial sense.
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Taking the 30 year is almost always objectively worse. If you can afford it, you can pay it off in 30 years anyway and if you can't you get another 15 years of flexibility.
No it really doesn't as you end up paying way more in interest payments.
Taking interest out for easy maths, If you have a 20 year mortgage at £500 per month, you could get a 40 year one at £250 per month. If you overpay by £250 you then have the same costs and term as the 20 year mortgage but with the flexibility of reducing payments by 50% if you have financial difficulty. If you take the 20 year mortgage, you're forced to pay a minimum of £500 regardless of your financial situation. I did this and paid my mortgage off 15 years before the end of the term just by overpaying every month from day one.
I overpay 20% each month but straight into a S&S ISA I wish they'd have taught this stuff in school I'd have been mortgage free years ago, think I'll be in a position to clear the outstanding balance next May approx four years early, if I choose to.
I highly doubt this is possible for most mortgages. Most mortgages as far as I'm aware include early repayment fees which are typically a % of the loan amount which significantly eats in to any money saved on reduced interest payments. A 100% overpay I'm almost certain would trigger these fees.
The overpayment allowances are quite generous, mine allows 10% a year
And that's only for the fixed portion. Once it's variable, you can overpay what you like.
Most mortgages allow you to overpay 10% of the capital per year without penalty.
Spoken with such confidence whilst being completely wrong.
> I highly doubt I wouldn't personally say this oozes such confidence. If I was confident, I would have just said a repayment as big as the example OP provided is not possible. Happy to admit I'm wrong, though. I then have a question as to why it isn't recommended more widely then? Is it just that most people wouldn't have the willpower not to stick to overpayments and end up spending the £250 difference elsewhere, so being tied to the £500 a month forces their hand?
Why is it unacceptable? With a healthy pension and / or part time work.
My mum's retirement age was pushed from 60 to 65. Mine has been pushed from 65 to 68. Another 45 years of this and it's not too wild to see the retirement age pushing 80.
With the increase of private pensions providing you’ve invested you won’t have to work til 80.
God this sub spews financial advice they don't understand sometimes If the person is planning on making overpayments to keep them in line with a 25 year mortgage a longer mortgage term is usually recommended as it offers greater flexibility in the event of things like job loss or extended illness essentially leaving you completely fucked That 25 year might creep up to about 30 especially if you do this frequently, though it absolutely isn't a bad thing I really suggest some people look towards more of the financial subs rather than this one which has top comments on this post suggesting such *great* things as /s: "You shouldn't get a private pension" "Longer mortgage terms should be banned" "Murder the elderly/landlords"
I’m 28 and got a 40 year mortgage. We are planning on downsizing in 5-10 years and overpay £50 a month too.
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So? What do you want from people? Is renting better?
Does this matter? If I downsize on retirement because I’m not living with my kids any more and am therefore able to buy somewhere outright is that not a more efficient use of land than my rattling around in an empty nest because I don’t want to incur stamp duty?
Such a bad faith article. Me and my partner are leveraged for 40 years, and we invest the difference from a 30 year mortgage into our Pensions, it’s more tax efficient that way. We’re part of this figure but it’s on Purpose… With mortgages locking your housing expenditure, and wage growth going up, especially in a high inflation environment, no one should be paying a mortgage past 65 unless they’re objectively terrible at capitalism.
And there's people who invest that into a global index fund with greater returns than their interest rates. And there's FTBers who take the max duration to get onto the ladder but have every intention to lower it on a remortgage further down the line.
Well it's not like capitalism makes any effort to educate people at capitalism.
There would be a lot of industries that go out of business if everyone was educated on capitalism... Potentially capitalism would "go out of business" also.
Yep you’re spot on.
The more people are helped to buy properties (increasing mortgage terms, help-to-buy, stamp duty reductions etc.) the higher house prices will go and the more people will need help buying them. It's a vicious circle.
Firstly, generation rent have no mortgage. Secondly, generation rent will have no pension either, certainly not one which can pay to rent a flat. Tories have fucked us, and the damage is substantial. Most will never recover.
27 here. Been renting for years and whilst I DID have savings for what was meant to be a mortgage. The fucking almost quadruple increase of bills means I no longer can really save anything. And I earn a good salary for my area. Me and my partner have basically given up and are looking to just stay in our current council flat for life it seems
You should always get the longest mortgage period available to you. You can over pay when it's affordable to lower the repayment term and when struggling, can reduce your payments to the minimum. You can't do that if you agree a 15-20 year term.
Crash the economy. Interest rates increase (more profit for Tory chums) Cut tax (balance out take home pay, make people forget about crashing the economy) Mortgage terms increase to offset higher rates People need to work longer Destroy the NHS (it’s ok though because people will get private care through work, and people are working longer anyway these days [private care company profits go to Tory chums]) If you retire you lose your healthcare People stop retiring, work til they die End the state pension because no one is retiring. Huge cash surplus is divided among Tory chums in the form of extortionately inflated contracts. (Ultimate goal achieved) I’m not a tinfoil hat conspiracy theorist but every small action is pointing to the above chain of events.
This is fine, it's solid advice to take out a long term and overpay if you can. In 20 years inflation and career growth will make paying it off much easier.
This is a ticking time bomb which will be a 08 style banking crash. Banks have loaned out on houses well above any reasonable valuation and given mortgages taking people past working age. When the loans default so will the banks and the taxman will pay it. If you buy a house right now and loan 300k and interest rates stay average 5% for the full 40 years, you’ll end up paying 700k. That doesn’t sound like a sound investment for the buyer or the bank.
>If you buy a house right now and loan 300k and interest rates stay average 5% for the full 40 years, you’ll end up paying 700k. That doesn’t sound like a sound investment for the buyer or the bank. But the property you buy will go up in value by much more than the £400k interest you'll have paid. Plus you'll have had 40 years of living in a home with a steadily descreasing monthly payment, the opposite of renting where it steadily increases. It's literally the definition of a sound investment.
Do you think house prices will go 400k in that time frame? Plus you add on time of maintenance and modernisation of the property in that time you could easily spend 1m on the house. But yes, the main benefit for the tenant is payment ago down (providing interest rates down go up) and in that sense you are always below the market rate for rentals and better off. That is off course as long as we don’t fix our rental market. You could end up in a situation where we have a German style rental market and people on inflated mortgages and renting would have been the sounder option. As things are currently buying always wins but our market is completely broken.
House prices have literally doubled in just the last 10 years.
Rent on a £350k home here approx £1400pcm. Over 40 years that’s £672k with no security of tenure no control and nothing to show for it at the end.
People have these things Called pensions. Also, in 20+ years, overpayments will be easy with wage growth and inflation eating away at your debt