Gilgongo wrote:Our kid is now 21 years old, and while I've mentioned saving and investing in the past to him, I thought I'd ask how his retirement fund was getting on. All casual like.
But then I considered:
1. He has approaching £35K of student loan debt: a tax on his future earnings.
2. The student loan makes it harder to save for a deposit on a house. He may be paying perhaps more than half his income on rent.
3. Points 1 and 2 mean he will have significantly less means to save for retirement.
4. Even if he did manage to save for a pension, annuities are rubbish and relying on the markets means you have to have a lot to cushion volatility.
5. The state pension is likely to be tiny and he may have to work until he's 80 before he gets it.
So I thought better of it as didn't fancy getting a smack in the mouth.
But does anyone have a different take on this (that doesn't involve spending less on Avocado toast)? I suppose some miracle might mean annuities make a comeback? UBI? What?
1. All other things equal, graduates have higher career earnings than non graduates.
2. Could move back home while saving for a deposit. I did. Many people I know did. It's an option.
4. Nobody buys an annuity any more. Since pensions freedom came into effect, it's all about drawdown and managing your own retirement pot.
5. OTOH the Triple lock means the SP should comfortable exceed the median wage by the time he gets to draw it
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Sorry, but no generation has it handed to them on a plate. Yes there are difficulties for GenZ amassing wealth today, but there was for the Boomers, Xers, Yers, and everyone else.
Youngsters today have never had it so good in may ways-
- They benefit from higher life expectancy and realistically have a 45-50yr or longer investing horizon
- Low cost indexing has never been cheaper or easier
- There's a wealth of history and knowledge to draw from which simply wasn't available to previous generations