Reue's Pension FAQ

Thirty years ago, the second person's income didn't count so house prices were reflected in that accordingly.

Are you sure? You might not have got x3 on the second income but I'm pretty sure it counted.

Posted from TSR Mobile

My dad was on around £19k but it was the repressive interest rates that were against them at the time.

Are you sure? You might not have got x3 on the second income but I'm pretty sure it counted.

Posted from TSR Mobile

I'm sure about this back in the 70s, but it was only in the late 80s / early 90s that the mortgage market was deregulated. What I do know is that my parents stretched themselves in 1988 by purchasing a £56k house. My dad was on around £19k but it was the repressive interest rates that were against them at the time.

By contrast, my wife and I comfortably afforded our £230k house together. Ironically, we now have a joint income of less than £45k but low interest rates are making things very affordable. Should be ok though as we are fixed for 5 years.

Using the 'double every 10 years' algorithm, your dad's salary would be about 80k quid in today's money [two full doubles, and then 2008 to 2016]. His house would be worth slightly more than your 230k quid house. This is assuming that the 'double every 10 holds on your side of the pond. There must be an inflation computing algorithm on the web somewhere to do this more exactly.

The insidious thing is that for many people, salary increases have not been keeping up with inflation. Highly technical positions have kept up [design engineers, software developers, and physicians/solicitors]. In many other areas, people have been falling behind. It used to be that people got started by building or re-furbishing their first house. My technical mentor that got me into engineering, built his own house when he got out of the US Air Force in 1956. Unfortunately, of late, doing things involving manual labour [even for yourself] seems to have fallen out of favour. When i was at school - the only kids with cars, were those who could find one behind a farmer's barn, get it running themselves, and pay for it with their paper route money. Today, it's "daddy, daddy, buy me a new BMW!!" Not only do the kids have no interest in DIY or mechanics, neither do their 'rents. If you are independently wealthy, i guess this is ok. I've never lived that way though. Cheers.

Agreed. Although in today's money his salary would have only been £35k to £40k based on the fact that he worked in the NHS.

And as for cars etc. They are vastly cheaper than they were in the 80s as a proportion of salary. In fact lots of stuff is. I remember buying my first sh1t tent in 1993 for £40. You can by the same tent now for a fiver. Good bless cheap imports.

Your dad's salary is a function of the propensity of both our governments to rob us. Whilst inflation has doubled ever 10, salaries (at least since 1973 or so) have not kept up with that.

Nope, in the US average wages have pretty much kept pace with inflation.

Well, the "problem" is that the "inflation" numbers that everyone quotes are 'cooked' statistics. Actual inflation is much higher than what is quoted. They specifically exclude from 'inflation' statistics, food, fuel, and something else - i think real estate. These are the items rising the fastest. Cheers.

Your dad's salary is a function of the propensity of both our governments to rob us. Whilst inflation has doubled ever 10, salaries (at least since 1973 or so) have not kept up with that. That is why the ratio of house prices are no longer 3 to 3.5 average annual salary. Single family houses in my neighbourhood are running (asking price) about $300,000 to $350,000. This means that the 'average' income in the neighbourhood should be about $100,000 to $150,000. even if you lump the woman's income in, Say the guy makes $80,000 and she makes $30,000. The guy's income is comparable to a mid level electrical engineer, and hers is comparable to a mid level school teacher. I can assure you that the average employment in the neighbourhood, including salaries, is NOT that high. Probably just over half that would be more typical. This is why you see 10 or 15 latinos living in a single family house. Cheers.

It's bonkers. They're missing out on the company contribution and the tax relief. For example if you're a basic rate tax payer and on salary sacrifice; you pay around £70 to get £200 into your pension. What other investment is going to make that much instantly?!

When i started working as an engineer in 1969, ... I get just over $2000USD from Social Security, and about $800/month total, from 2 private pensions.

Actually if you have been a well paid engineer contributing the maximum monthly amount privately since 1969 I'm surprised your private pension is so much lower than Social Security.

And again regarding inflation - food fuel and housing ARE included.
https://www.thestudentroom.co.uk/showpost.php?p=76080784&postcount=92

Part of the reason for the discrepancy is that Social Security is pro-rated over the 'average' lifespan. Eventually, your SS will run out of funds i understand.

^this!!!!!!

(One small extra thing, I'd recommend having more than 1 pension provider - just in case...)

Additionally, i would recommend NOT allowing your company to 'administer' your pension. Also, don't let anyone put stock from your company in your pension plan. If you want company stock, buy it from a regular broker. I did purchase TRW stock, when i worked for them. I got it at a nice discount, but was always leery of it. Shortly after i left them, they became the subject of a 'hostile takeover'. I withdrew my TRW stock and sold it. After that kind of a takeover, often the target company's stock tanks. It turned out, this time, that things went ok, and i could have kept it - without 'taking a bath'. I felt better, being out of their stock anyway. The problem with letting your company run things, is that in the past, often companies have 'packed' pension plans with company stock - which later turned out to be nearly worthless. The company went broke, and the workers ended up with nothing. Cheers.

Additionally, i would recommend NOT allowing your company to 'administer' your pension. Also, don't let anyone put stock from your company in your pension plan. If you want company stock, buy it from a regular broker. I did purchase TRW stock, when i worked for them. I got it at a nice discount, but was always leery of it. Shortly after i left them, they became the subject of a 'hostile takeover'. I withdrew my TRW stock and sold it. After that kind of a takeover, often the target company's stock tanks. It turned out, this time, that things went ok, and i could have kept it - without 'taking a bath'. I felt better, being out of their stock anyway. The problem with letting your company run things, is that in the past, often companies have 'packed' pension plans with company stock - which later turned out to be nearly worthless. The company went broke, and the workers ended up with nothing. Cheers.

When i started working as an engineer in 1969, i was buying 'pump petrol' at $0.20/ gallon(US). Now, it's $2.40/gallon. The publicised inflation figures exclude food, fuel, and housing - the three fastest rising items in most people's budget. This is so they can (falsely) claim that the "inflation rate is 'only' 5%. In reality, it's closer to 18% to 20%, .

Why shouldn't I let HMG administer my pension?