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I'm not sure what it's like in America but in England the retirement situation is absolutely criminal. I went through high school and was never once taught abou

I'm not sure what it's like in America but in England the retirement situation is absolutely criminal. I went through high school and was never once taught about retirement (and specifically pensions), my knowledge of pensions was limited to "they pay for old people" and until last year when a pension adviser came into the company office and explained them to me I did not consider ever setting up a pension. Thanks to that adviser I now have a pension that will (assuming I continue contributing to it) give me a fantastic retirement that I would not have otherwise had because starting a pension at 20 provides massive benefits over starting at 30 or 40. I've found myself preaching the value of pensions to dozens of people also in their early 20s in the last 12 months, not one person I've spoken to has understood the value of starting a pension now until it was demonstrated to them, it's crazy.

adolph 13y ago
A cynical viewpoint: the acceptable curricula for most schools is set through an accreditation process heavily influenced by the government. The government has an interest in maintaining a supply of voters dependent on the dole. The curricula stays abstract and while the procedures to calculate retirement savings may be taught, the concrete examples stick to keeping the trains running on time.
- sp332 13y ago
  I doubt it. A good retirement plan will make you a good taxpayer for decades longer.
- koralatov 13y ago
  That would be a good plan, except for the fact that those on long-term benefits have amongst the lowest turnout at elections.
ronaldx 13y ago
There are significant downsides to saving for a pension as well, as I will try to illustrate: The advantage of putting money into a pension (rather than regular savings) is presumably that you get to save the money in a relatively tax-efficient way. In the UK, you can presently take a percentage as a tax-free lump sum, and an annuity allows you take advantage of an assumed lower tax liability at retirement. That's all very nice. However, if you have 40 (or even 50?) years until retirement, you'll be relying on several governments not to pull those rules and pinch from your pension pot, and you're relying on the financial industry to kindly look after your money for that long. More urgently, putting money into a pension means that you don't have it for what you need now: if you need to pay off (or simply avoid) expensive debt, or if you need to save for housing rather than paying extortionate rent/mortgage costs, those should likely be higher priority. There are not many young people who can put those concerns to one side and start saving earnestly for retirement.
- RyanZAG 13y ago
  I believe the OP is actually speaking about saving in general, not specifically in a tax beneficial investment. He appears to be arguing more for the idea of saving in general over spending all your income. Obviously a preferable strategy. The notion - not to save anything - actually comes as a bit of a surprise to me, so I thought I'd point it out.
- citricsquid 13y ago
  There are downsides and pensions are not right for everyone, that much is true, however to describe them as "significant downsides" is misleading and is the sort of claim that has led to a lot of people now approaching retirement having nothing[1]. Pension rules could be changed by any government (as they have been a couple of years ago) however there is little incentive for this to happen in any impactful way: private pensions are what reduce the dependence individuals have on the state at retirement and the more individuals with pensions then the less the state (through taxes) has to pay out, this is good for the government, this is why the government provides tax incentives to contribute to a pension[2]. There's no difference between the government stealing from pensions and stealing from bank accounts or taking back property, if you were concerned about the government stealing from your pension wouldn't you have other concerns too? Pensions are certainly not a magic bullet that is perfect for everyone, they are however something that should be seriously considered by most people. You don't have to make the decision between saving for a house or having a pension, if you can afford to save for a house then it's very likely you can afford to contribute towards a pension too! [1] During the 80s and 90s a lot of people looked upon pensions with suspicion and opted out, now personal finance forums are full of people regretting this and blaming the media for the hysteria that has left them penniless. Most people didn't opt out of contributing to a pension to instead invest in stocks or property, they opted out to spend an extra £100 a month on luxuries. [2] For every £60 I put into my pension the government matches it with £40 (roughly).
  - ronaldx 13y ago
    I don't think you have clearly understood most people. Most young people genuinely can't afford to save for a pension beyond the state-provided pension - if you have any significant pension at retirement, you're in a position of luxury. People with private pensions are, objectively, significantly wealthy retirees who don't really need or deserve such tax protection as they presently have. This has already begun to change: the age-related allowance for pensioners has been scrapped, this year. You might be right that the political incentive won't be there (certainly, the media has spun the 'granny tax' impressively), and surely you won't suffer from being able to afford both housing and retirement savings, but the generation gap between wealthy old people and struggling young people is definitely causing increasing political tensions.
jswinghammer 13y ago
In the US most financial education happens in books, radio, or television. There are several personalities who all say the same basic things: stay out of debt, save cash for when shit happens, save for retirement-probably 15% or as much as you can, save for your kids college as early as possible. Pretty much everyone says the same things and it's not bad advice. People typically wait too late to save or pay off debt. It's very easy to hang yourself with debt in this country. It's probably the worst thing about living here. You can make good money and feel broke all the time because you signed up for two car payments, a student loan, and a 30 year mortgage where the payment almost entirely goes to interest for the first decade.

adolph 13y ago

A cynical viewpoint: the acceptable curricula for most schools is set through an accreditation process heavily influenced by the government. The government has an interest in maintaining a supply of voters dependent on the dole. The curricula stays abstract and while the procedures to calculate retirement savings may be taught, the concrete examples stick to keeping the trains running on time.

sp332 13y ago
I doubt it. A good retirement plan will make you a good taxpayer for decades longer.
koralatov 13y ago
That would be a good plan, except for the fact that those on long-term benefits have amongst the lowest turnout at elections.

ronaldx 13y ago

There are significant downsides to saving for a pension as well, as I will try to illustrate: The advantage of putting money into a pension (rather than regular savings) is presumably that you get to save the money in a relatively tax-efficient way. In the UK, you can presently take a percentage as a tax-free lump sum, and an annuity allows you take advantage of an assumed lower tax liability at retirement. That's all very nice. However, if you have 40 (or even 50?) years until retirement, you'll be relying on several governments not to pull those rules and pinch from your pension pot, and you're relying on the financial industry to kindly look after your money for that long. More urgently, putting money into a pension means that you don't have it for what you need now: if you need to pay off (or simply avoid) expensive debt, or if you need to save for housing rather than paying extortionate rent/mortgage costs, those should likely be higher priority. There are not many young people who can put those concerns to one side and start saving earnestly for retirement.

RyanZAG 13y ago
I believe the OP is actually speaking about saving in general, not specifically in a tax beneficial investment. He appears to be arguing more for the idea of saving in general over spending all your income. Obviously a preferable strategy. The notion - not to save anything - actually comes as a bit of a surprise to me, so I thought I'd point it out.
citricsquid 13y ago
There are downsides and pensions are not right for everyone, that much is true, however to describe them as "significant downsides" is misleading and is the sort of claim that has led to a lot of people now approaching retirement having nothing[1]. Pension rules could be changed by any government (as they have been a couple of years ago) however there is little incentive for this to happen in any impactful way: private pensions are what reduce the dependence individuals have on the state at retirement and the more individuals with pensions then the less the state (through taxes) has to pay out, this is good for the government, this is why the government provides tax incentives to contribute to a pension[2]. There's no difference between the government stealing from pensions and stealing from bank accounts or taking back property, if you were concerned about the government stealing from your pension wouldn't you have other concerns too? Pensions are certainly not a magic bullet that is perfect for everyone, they are however something that should be seriously considered by most people. You don't have to make the decision between saving for a house or having a pension, if you can afford to save for a house then it's very likely you can afford to contribute towards a pension too! [1] During the 80s and 90s a lot of people looked upon pensions with suspicion and opted out, now personal finance forums are full of people regretting this and blaming the media for the hysteria that has left them penniless. Most people didn't opt out of contributing to a pension to instead invest in stocks or property, they opted out to spend an extra £100 a month on luxuries. [2] For every £60 I put into my pension the government matches it with £40 (roughly).
- ronaldx 13y ago
  I don't think you have clearly understood most people. Most young people genuinely can't afford to save for a pension beyond the state-provided pension - if you have any significant pension at retirement, you're in a position of luxury. People with private pensions are, objectively, significantly wealthy retirees who don't really need or deserve such tax protection as they presently have. This has already begun to change: the age-related allowance for pensioners has been scrapped, this year. You might be right that the political incentive won't be there (certainly, the media has spun the 'granny tax' impressively), and surely you won't suffer from being able to afford both housing and retirement savings, but the generation gap between wealthy old people and struggling young people is definitely causing increasing political tensions.

jswinghammer 13y ago

In the US most financial education happens in books, radio, or television. There are several personalities who all say the same basic things: stay out of debt, save cash for when shit happens, save for retirement-probably 15% or as much as you can, save for your kids college as early as possible. Pretty much everyone says the same things and it's not bad advice. People typically wait too late to save or pay off debt. It's very easy to hang yourself with debt in this country. It's probably the worst thing about living here. You can make good money and feel broke all the time because you signed up for two car payments, a student loan, and a 30 year mortgage where the payment almost entirely goes to interest for the first decade.