I've been self employed for most of my life. Back in 1991, I took some advice from a financial advisor, who told me that it would be 'a good idea to set up a pension plan'. He explained how puttin away around 15% of my salalry for the next 35 years would mean that I could retire when I was sixty five with a nice guaranteed income every month. At the time, I was twenty nine and it seemed to be a very long way away. Now I am sixty two, it looms large. I took his advice and invested in various funds, which place money in things like shares. I have to be honest and admit I have never really checked to see if his suggestions were sound. More fool me. I have what seems like a reasonable sum in the pot, but as I've not really thought about retiring, I have not given it the attention that maybe I should, not that I'd really have a scooby what I am doing.
But here I am. Two years ago, I had a bit of a cancer scare. I love what I do, but assuming I've got somewhere between ten and twenty years of active life, how much of it do I want to spend sitting in reception of my studio? I sort of had an idea that I'd get everything sorted by the age of sixty seven, which is five years time. What this means, I don't know. I actually love working in music, playing in a band and chatting to our customers. But the other side of this, is that I have to make plans for the business beyond my tenure. The pandemic radically changed the scenery in music. It changed a profitable business into a very tricky one. The various tax hikes of the Starmer government and ULEZ courtesy of the Mayor or London have been extremely difficult, saying nothing of Vladimir Putin's gift of massive hikes in energy prices. If this wasn't difficult enough, now Donald Trump has unleashed chaos on the worlds stock markets. I have no idea how this has affected my personal pension, but if we assume stock markets have dropped by 10%, then I've lost 10% of my pension pot. If I was to take a guess that I'd have to live off my pension for ten years after I retire, then that means I have to work another year. This is assuming the chaos stabilises tomorrow. If Trump plunges the world into recession, then heaven only knows what the effect will be.
Donald Trump may be the bigliest genius ever to walk the face of the earth. His policies may well issue in a new golden age in the USA (something I doubt personally), he may end up with his ugly mug on the side of Mount Rushmoor, but as far as I am concerned, as someone who has worked hard all my life, never claimed benefits, been sensible and done the right thing, he's in the process of driving a horse and cart through my plans for the end phase of my life and I just wish he'd F*** O**. Unlike ordinary people, he will get a copper bottomed pension as a president (rather like all of our MP's etc do).
I have a lot of sympathy for the younger generation. They have been well and truly shafted with tuition fees and student loans. I wonder how many will actually have any cash to put into pensions? Whatever my problems are, they will fade into insignificance with the mess my generation is bequeathing. I do wonder how many people who voted for Trump and re approaching retirement, to MAGA will end up with a nasty shock when they retire?
3 comments:
It is not quite as simple as you make out. Your pension "pot" has a capital value at any moment in time. That pot also generates income, (or it should do !). During one's working life, that income is invested back into the pot, miraculously becoming more capital, or a bigger pot. When one retires, that share and also bond income now becomes your pension payment in simple terms. Whilst I am lucky to have a state and company pension, I also have invested inheritance capital that now gives me an additional income. Traditionally, (and also forced by law before George Osborne reformed it), a pension investment on retirement was used to buy an annuity, which paid a montly payment for life, but nowadays, one can do what one wants within reason. You should also get the state pension.
With all due respect, I think it is quite simple. The value of my pension funds are based on the investments they are held in. Any profits (ie dividends) that are re-invested, will also be devalued by Trumps incompetence. As for my state pension, it will be interesting to see if the UK's finances allow this to be maintained at the current levels, in five years time when I can draw it. Had I wished to retire before age 67, this would have been of no relevence.
Well, I hope it all turns out OK for you anyway.
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