Phil, over at Mr Home Maker, makes a very valid point to a work colleague, for those living in Australia, in this post.
Here in the UK and other countries, things will/may be a little different. In the UK you are currently still entitled to a full 'old age pension' providing you work and pay into it for the relevant number of years, currently 35! You can get a greatly reduced pension after 10 years of full payments.
Myself and numerous others, got caught in the gap and instead of getting our expected pensions at 60, having paid in the then 30 years worth of contributions, now have to pay another 5 years worth of contributions and also wait another 5 or 6 years to get said pension:(
So annoying when you retired because you had made the full contributions, expecting to get your pension then have that bombshell dropped on you. You may not consider it worthwhile to pay those extra 5 years of contributions (around the £650 - £750 per annum mark) but for me, because we have saved hard (and continue to do so), it is worth it, providing I live long enough to collect it. Those payments will give me an extra £80 or so, every month and that is a huge difference.
Women on average, live longer than men and if widowed, that extra money might make a huge difference to merely existing rather than living. Things are vastly different for a lot of women due to part time contributions, being divorced and not having access to their partners pensions, or partners dying before being able to build up much of a pension pot etc. It really does pay to think about it and get it sorted whilst you are still able to do so.
I know people who won't top up their contributions as 'everyone they know', has died before receiving their pension - a perceived reality not a truth in their case, as we know who they are referring to. Others, who are so superstitious that although they have pensions in place, won't make a will because they believe they will die if they do - I kid you not!
Even if the figures Phil quotes, might not apply to you in the country where you live, it is an excellent read and well worth considering your own circumstances and starting to think seriously about it.
Now is the time to sort out your expences, your bills, your debt. Get rid of the debt as soon as possible if you are able to and don't add to it unless you really have to. Reduce your living expences where possible, and your bills. Overpay your mortgage if possible as every year you no longer have to pay, is money in your pocket, not theirs!
Good advice!
ReplyDeleteI'm 4 years short on NICs in order to receive the full state pension but I have 13 years to make up the shortfall before I can claim at 66. No doubt they'll take my small NHS pension into account and swindle me if they can!!
I believe if you have paid into it, you get it. It doesn’t affect a private pension unless combined they take you over the tax threshold.
DeleteVery sound and sensible advice.
ReplyDeletePhil seems a very switched on guy.
DeleteAs the widow of someone who died in their early 50's, suddenly, I am so pleased I paid the top ups each year, even though I was on a very meagre wage. I am still not sure if private pensions are the way to go, the fact that this foul gov. are pushing them makes me suspicious, paintings and property may be a better bet.
ReplyDeleteHard to tell isn’t it.
DeleteI won't bother with the extra payments as I have a Civil Service pension as well as another private pension. But I could agree with you more when you say you should keep debt to an absolute minimum. I have friends who will rely entirely on a State |Pension when the time comes, yet they still continue to spend every penny they earn. Life's too short is what they say. Later life may also be poverty stricken ........you never know!
ReplyDeleteI think they think the state will take care of them.
DeleteMy goodness that's a very revealing post from Mr Home Maker. I am currently involved this week with sharing The Poverty Alliance "Sticky Labels" campaign and on Friday will sign the pledge on behalf of the voluntary organisation in which I am (very) involved. My part is to represent older people in the community who are sharing their skills for free in order to upslill others. Like yourselves, we worked hard or the pensions we received and have very quickly adapted to life on a fraction of our previous income. I now feel free to say no to any outings-events which I feel are not good value and DH and I are doing some DIY together this morning in regards to home maintenance. Catriona
ReplyDeleteBeing frugal is just the way we are now. We don’t go without everything but just decide if things are worth spending money on.
DeleteThe pension system is so different from country to country. In comparison, the Australian pension system issues seem mild to some of the challenges you are facing. It is important that folk like you that have your 'head around it' share and educate others often just like you have in this post.
ReplyDeleteThank you, we try.
DeleteNot sure if here in Canada I can top up my pension payments but I am going to do some research on the topic.
ReplyDeleteHaving no debt and DH having a goodly amount of RRSP's put away is helping us a great deal.
God bless.
I think you can but it depends on your contributions and age.
DeleteI’ve tried so hard to instill this into my children just as it was instilled into me xx
ReplyDeleteAll we can do is try.
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