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188

Baby boomers are sitting pretty – as millennials foot the bill for high inflation (inews.co.uk)

submitted 1 year ago by Patch@feddit.uk to c/unitedkingdom@feddit.uk

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[–] hellothere@sh.itjust.works 9 points 1 year ago* (last edited 1 year ago)

If your household income (excluding state pension) exceeds the free tax threshold (£12,500) then you don't qualify for a state pension.

This is laughably cruel, and barely 2k a year above the state pension. In what reality is 12k a year anything other than poverty?

If this is funded via pension savings, you need something in the region of 250-300k to either buy an annuity or have a safe withdrawal rate to have an income of 12k a year.

Assuming a 4% average rate of growth - after charges and inflation - from your 18th birthday until retirement at 67, you need to be contributing the equivalent of 167 quid in today's money, every month, for 49 years, to get that 300k. That may not sound like a lot, but keep in mind a few things:

the vast majority - 200k - of that value comes from compounded growth, not contributions, making you extra vulnerable to underperformance
what and when people can afford to save heavily depends on their circumstances, which change throughout their lives. If you went to uni and started contributing at 23 instead of 18, you'd lose 50k just in lost compound effects. Same applies to stopping work to have kids, to support an ill relative, etc.
according to this recent times article the average pension pot is approx 37k total, so the vast majority of people are no where near close saving even this seemingly low figure. 37k gets you whopping income of ~100 quid a month.

As you say further up, the country spends considerable sums on the elderly when you include the NHS, etc. That figure is not going to decrease if even more people are in poverty. Health costs have this annoying habit of getting higher the closer to death you are, and accelerating that ain't the best idea.

Throwing in the towel just because it's expensive is not the answer.