How Much Do You Need?
A slightly different track today dear reader; it follows an argument [of sorts] I had earlier with a "professional" adviser regarding pensions - those savings plans riddled with hidden costs, requiring the saver to accept a degree of investment risk few truly understand and laced with tax penalties and further costs when the day comes to take it. No earlier than age 55.
I was reading an article written by an IFA just over 2 years ago and his statement that a £1m pension pot will not go far. To many of us, the idea of ever getting to £1m in our pension savings appears pure fantasy but the thought that even this will not be enough is somewhat disheartening.
Of course, we are all different. So our needs will differ as much as our circumstances allowing us to save - should be choose this troubled option.
Government policy - as with most things - has not helped. Restrictions on contributions and innovative investment coupled with "freedom" from buying an annuity has left this once vaulted medium tired, poor value for money and in these days of people having more than one income stream, outdated.
For those able to resist the "Lamborghini" option - taking it all in cash and paying the tax consequences - there is the IFA favourite of "drawdown". This requires us to accept an even higher level of investment risk [at an older age] and an unknown range of costs to receive income periodically - made up of our tax free cash allowance and the balance of the fund.
Tax planning at its finest!
Many folk are turning their backs on pensions - understandably -and going to the ISA corner instead. No tax relief on investments, the same risk issues - unless you find the prospect of around 1.5% pa in interest just too attractive - a lower cap on annual allowance but at least when funds are drawn they can be without waiting to attain any specific age and they will be tax free.
This is the centralised system's proposition for our old age. With pensions now being mandatory.
Alternatively you could join the crypto revolution; no restrictions, total security, unlimited spending opportunities worldwide, no investment risk [it is currency - money NOT a security - despite what you might have read] It will not reward the IFA with a commission and the regulator is so terrified of mass adoption it will ban any regulated firm or person for daring to promote it. You can make full use of AI and, as I have experienced personally, see the value of your holding increase by up to 1%. Each day.
Einstein referred to compound interest as the 8th wonder of the world. Go to on to an online compound interest calculator, add a starting £100 worth of crypto and assume a 0.5% return each day. See how long it takes you to reach £1m.
I have such a Calculator if you need access to one. I know my number.
Do you want to know yours?