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Author Topic: Bimbo Brains  (Read 1543 times)

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STEMO

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Re: Bimbo Brains
« Reply #45 on: 14 July 2019, 11:36:21 »

I couldn't help noticing how much my wife's pension increased over the last seven years of service. It creeps up slowly to age 60, when she would get an annual pension of 38000 and a lump sum of 49000. Then it jumps up quite dramatically, 44,500@62, 52,600@64 and 68,000@67. The lump sum stays the same as that is part of the, now closed, final salary.

Please explain, Jimmy.
Pity I won't be around to see it  :(
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Doctor Gollum

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Re: Bimbo Brains
« Reply #46 on: 14 July 2019, 11:56:31 »

Compound interest.  :y

At 7% it doubles every 10 years, at 10% it's every 7 years.

Rather than simply trying to save your retirement fund, invest it in good mutual funds and reinvest any dividends.

Paying the mortgage off and have no other credit payments allows you to invest any cash that would otherwise be paying to creditors and get it working for you.

 8)
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Re: Bimbo Brains
« Reply #47 on: 14 July 2019, 12:30:18 »

Compound interest.  :y

At 7% it doubles every 10 years, at 10% it's every 7 years.

Rather than simply trying to save your retirement fund, invest it in good mutual funds and reinvest any dividends.

Paying the mortgage off and have no other credit payments allows you to invest any cash that would otherwise be paying to creditors and get it working for you.

 8)
If that reply was for me, it's well wide of the mark. Wifey pays just short of 12% of her wages into teachers pension, her employer pays just over 13%, so 25% going into her fund.
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Doctor Gollum

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Re: Bimbo Brains
« Reply #48 on: 14 July 2019, 12:35:48 »

Compound interest.  :y

At 7% it doubles every 10 years, at 10% it's every 7 years.

Rather than simply trying to save your retirement fund, invest it in good mutual funds and reinvest any dividends.

Paying the mortgage off and have no other credit payments allows you to invest any cash that would otherwise be paying to creditors and get it working for you.

 8)
If that reply was for me, it's well wide of the mark. Wifey pays just short of 12% of her wages into teachers pension, her employer pays just over 13%, so 25% going into her fund.
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

Put that amount into a compound interest calculator with the growth rate of the pot and see what happens with over time.

Put the number of years to match how long to the older age that she might retire and you'll be able to back track to the younger... The pot difference might surprise you ;)
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STEMO

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Re: Bimbo Brains
« Reply #49 on: 14 July 2019, 12:53:32 »

Compound interest.  :y

At 7% it doubles every 10 years, at 10% it's every 7 years.

Rather than simply trying to save your retirement fund, invest it in good mutual funds and reinvest any dividends.

Paying the mortgage off and have no other credit payments allows you to invest any cash that would otherwise be paying to creditors and get it working for you.

 8)
If that reply was for me, it's well wide of the mark. Wifey pays just short of 12% of her wages into teachers pension, her employer pays just over 13%, so 25% going into her fund.
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

Put that amount into a compound interest calculator with the growth rate of the pot and see what happens with over time.

Put the number of years to match how long to the older age that she might retire and you'll be able to back track to the younger... The pot difference might surprise you ;)
You not getting it. If she didn't pay into the teachers pension, she'd lose the employers contribution.
There is absolutely no way that a public service pension can be beaten by investment in the markets.
« Last Edit: 14 July 2019, 12:55:22 by STEMO »
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Re: Bimbo Brains
« Reply #50 on: 14 July 2019, 13:02:56 »

If they didn't match it and she put 25% away, what would the difference be?
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Re: Bimbo Brains
« Reply #51 on: 14 July 2019, 13:15:25 »

If they didn't match it and she put 25% away, what would the difference be?
What? The difference would be that it would cost her twice as much...of course. ::)
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Re: Bimbo Brains
« Reply #52 on: 14 July 2019, 14:41:24 »

If they didn't match it and she put 25% away, what would the difference be?
What? The difference would be that it would cost her twice as much...of course. ::)
Exactly, my point being, that with some thought people could realistically (easily even) put away 25%, especially with no mortgage payments.
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Re: Bimbo Brains
« Reply #53 on: 14 July 2019, 14:44:25 »

If they didn't match it and she put 25% away, what would the difference be?
What? The difference would be that it would cost her twice as much...of course. ::)
Exactly, my point being, that with some thought people could realistically (easily even) put away 25%, especially with no mortgage payments.
You don't give up, do you? If your post was in reply to mine, which it obviously was as we're having this conversation, then your premise is utter bollix. So now you've changed it to 'some people'.
Learn to put your hands up when you're wrong, Al.
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Re: Bimbo Brains
« Reply #54 on: 14 July 2019, 16:06:24 »

And if it was to me, my+employer contributions are way higher than 25%. And still predicting that I will be reliant on the state pension, if such a thing still exists in 18 years.
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Re: Bimbo Brains
« Reply #55 on: 14 July 2019, 17:26:08 »

If I put away 25% and I assume it averages 8% growth*, until 67, that gives me a fund of 836,600, lose the 49k and draw a salary of 62k a year, then I get to 92 years old with 210k to my name having had a monthly income of 5,200.

And that's without a match.

What have I missed?

Current pot is at 11% in 10 months so don't think an average of 8% is out of line.
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Re: Bimbo Brains
« Reply #56 on: 14 July 2019, 18:03:21 »

My missus will be close to, or over, the lifetime allowance, so she couldn't really do any better.
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Re: Bimbo Brains
« Reply #57 on: 15 July 2019, 00:05:07 »

I couldn't help noticing how much my wife's pension increased over the last seven years of service. It creeps up slowly to age 60, when she would get an annual pension of 38000 and a lump sum of 49000. Then it jumps up quite dramatically, 44,500@62, 52,600@64 and 68,000@67. The lump sum stays the same as that is part of the, now closed, final salary.

Please explain, Jimmy.


I think its probably a product of a couple of things. Firstly, every year past 60 your OH isn't retired, means its a year "saved" as far as the pension company is concerned.  The pension company will predict she has about 25yrs to live at age 60 (life expectancy 85 is about the going rate for someone age 60 today I think). So, if she stays in work 2 more years they will split the money she would have received in those 2 yrs over the remaining 23 of her assumed life. 38,000 x 2 / 23 = about an extra 3,300 per yr.

Secondly, they're investing that 38,000 x 2 = 76,000  for an extra 2 yrs (plus her 49,000 lump sum that she hasn't drawn down) at say 8% return, there's another 22000 ish to spread over the 23 yrs they'll be paying her 22000 / 23 = circa 900 p.a.

Finally,  she's also contributing for those two years. Assuming she earns 60,000, that means there's an extra 60,000 x 25% x 2 = 30,000 to split over the 23 yrs, giving an extra 1300 per yr.

Adding these gets you to 43,500.

Clearly, I'm still a grand short, so I'm guessing the pension benefits are index linked in some way? If you find out what inflation rate they use for the benefits, it will probably get you to 44,500.

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Re: Bimbo Brains
« Reply #58 on: 15 July 2019, 00:11:55 »

While I don't doubt those who serve our country deserve recognition. To say an annuity of 33k isnt much is a bit strong. Outside of the public sector, you'd want the best part of 750k to buy that pension, and that's without index linking, spousal benefits and all the other niceties the public sector chuck around like they're freebies.

On the open market you'd probably have to have getting on 850k to buy the equivalent. Takes some saving on "only" 27yrs.
I agree on all counts.  33k is an absolute pipe dream for me, even including my, now frozen, 15yrs of DB pension. Despite the very high percentage I pay into my DC pensions.

The general view on (pure annuity only) pots is for each 100k of savings gives around 3-4k of annual pension for someone my age (sub 50) with an estimated retirement age of 67.  So for 33k, I'd need a pot of just over 1m.  And a near decade of global recession, and another generation of low growth due to all the EU snafu, investments aren't likely to grow, so it has to be pure savings.

I have to agree, I've taken the view that for every pound that goes in, I'm not giving 40p to the tax man and my employer puts in a quid, so all I want is for my investments to keep pace with inflation.

I've set a personal goal of being 'on the beach' at 55, (assuming no children) but if I'm going to get the job done in the 20.5yrs that I have left, I see either Buy to Let or a side line in house renovation as my only options to get there. Ask an IFA for an index linked annuity starting at age 55 and most of them will pi$$ themselves laughing.
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Re: Bimbo Brains
« Reply #59 on: 15 July 2019, 06:19:28 »

I couldn't help noticing how much my wife's pension increased over the last seven years of service. It creeps up slowly to age 60, when she would get an annual pension of 38000 and a lump sum of 49000. Then it jumps up quite dramatically, 44,500@62, 52,600@64 and 68,000@67. The lump sum stays the same as that is part of the, now closed, final salary.

Please explain, Jimmy.


I think its probably a product of a couple of things. Firstly, every year past 60 your OH isn't retired, means its a year "saved" as far as the pension company is concerned.  The pension company will predict she has about 25yrs to live at age 60 (life expectancy 85 is about the going rate for someone age 60 today I think). So, if she stays in work 2 more years they will split the money she would have received in those 2 yrs over the remaining 23 of her assumed life. 38,000 x 2 / 23 = about an extra 3,300 per yr.

Secondly, they're investing that 38,000 x 2 = 76,000  for an extra 2 yrs (plus her 49,000 lump sum that she hasn't drawn down) at say 8% return, there's another 22000 ish to spread over the 23 yrs they'll be paying her 22000 / 23 = circa 900 p.a.

Finally,  she's also contributing for those two years. Assuming she earns 60,000, that means there's an extra 60,000 x 25% x 2 = 30,000 to split over the 23 yrs, giving an extra 1300 per yr.

Adding these gets you to 43,500.

Clearly, I'm still a grand short, so I'm guessing the pension benefits are index linked in some way? If you find out what inflation rate they use for the benefits, it will probably get you to 44,500.
Thank you.
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