16 Jun 2017, 11:18pm
living intentionally
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  • Over 50s are big spenders on home and lifestyle into retirement and beyond

    Be afraid, people, be very afraid. Saga 1 tells us the over 50s are big spenders. It’s the beyond retirement that I’m intrigued by, have these profligate silver surfers found a way of borrowing from their own cold dead hands? I’m sure the intergenerational foundation would have something to say about that, but Saga?

    I’m sorry, but by the time you’ve gotten over 50. you shouldn’t be in the business of borrowing for frippery, For sure, you shouldn’t be paying down your mortgage if there are better things you can be doing with your money, like socking it into a pension or investing it. But if you want a new kitchen, and need to buy that sucker on the never-never, then you need to take a long hard look at yourself. Now there is a case to say YOLO, but only if you can be sure that you can outrun your debts. The advantage a young person has in going YOLO and living beyond their means is they have human capital in spades – their future self gets to work longer or harder to redeem their overspending. The finished at fifty, not so  much.

    For a fifty-something to play the YOLO game effectively, you need to be able to know the year you die. Now you can determine that, but it’s all going a bit Logan’s Run

    Jenny Agutter in Logan’s Run

    and often involves Dignitas. I’m personally of the opinion that a sentient being ought to be able to choose that option, but terror management theory generally induces most of us off the way of the Cylopes. It really would make retirement planning a damn sight easier, but the option is still an uncommon choice.

    So many new cars, Saga surfers, so few holidays, WTF?

    Saga say these over 50s buy three new cars in the decade 50-60 and yet only seven foreign holidays, which strikes me as odd, what’s with the materialism grizzled citizens of Saga-land? Mind you, Saga are one of the few banks to advance a loan based on income both from a pension and from savings and investments. The trouble is the usurous 7.9% APR. I’ve groused before on how an retiree is a loans pariah, even when the aim of the loan is to use tax allowances, indeed a 7.9% APR would be tolerable to get a 20% uplift. But not if you have to be a homeowner and it’s secured on the house. Although taking up a use it or lose it tax allowance is a reasonable sort of thing to borrow money for, it becomes non-reasonable if you open yourself up to the risk of losing your house or becoming a forced seller.

    Paying nearly 8% for a new kitchen or car before you have saved for it is just foolish in my view. and by the time you are into your sixth decade you really ought to have learned better. Unless you have a good reason to believe your future self will be richer than your present self, just don’t do it.

    The 50s is a very tough decade for the FI crew to get right

    This decade is tough for many reasons. You can’t get hold of your pension savings until your are 55 and rising, so a whole chunk of your savings may be sterilised, the old silo problem again. You are fast running out of human capital – it very much depends on the field you have been working in, but openings at the sort of salary you were on if you can consider early retirement may be rare. Your financial risk exposure to redundancy is high, and you have less time to catch up if it does happen to you. You may be at a peak of child-related spending unless you had your children very early in life. One of the notable features of the early retirees from The Firm before 55 was that they were mostly the child-free, and being out of the university expenses meat grinder was probably a big part of that.

    Retiring before 55 runs against the general way people do retirement, and it’s a more critical decision because just as you cut the power you have the longest glide path to sustain. It’s a hard balance to get right. Looking back, it is clear that I underspent in the early years following retirement in 2012. Compounding the error I earned a few lousy bits of money in a few one-off hit and run jobs and then picked up a steady income from some technical stuff and bookkeeping until last month. I never recognised these amounts as any useful amount of money, because they were typically less than 10% of what I had been earning when I was working, and I didn’t trust them, so they formed no part of my budgeting. But they seemed to make a surprisingly large contribution to the slowing of the fall in my networth, which was aided by the stock market being tremendously kind to me across the years 2009 to now, until I could make it with just my DB pension because I could defer it long enough.

    Much as I was a purist in that the aim of retirement was to bust The Man right out of my life, I discovered that it was freedom from the rules and the bullshit that I wanted, only later did I find it was also the freedom to do other things, which is why it is time to get work right out of my life again as my pension savings come on stream. No SHMD The Returned for me 😉 I am no longer self-employed as of this month, now that I have collected my second and last year of Class II NI contributions purchased at the spiffing price of £150 p.a. When I was on PAYE I was paying over £5k p.a. and the cheeky barstewards made those years count less for being contracted out. It’s not necessarily the last money I will ever earn, but I will favour no-commitment one-off hit and run jobs in future.

    I don’t know what the personal circumstances of all these profligate Saga spenders are. This extract doesn’t convince me they are that well off –

    Lenders have been short sighted by turning down people by looking only at earned income which is one of the reasons we launched Saga Personal Loans, to give more people access to credit they can afford in order to live the way they want to.

    Perhaps Saga haven’t targeted me because I am simply too poor, not because I have cleverly dodged their tracking mechanisms. But if their fifty somethings are borrowing money to do up their houses and buy three new cars in 10 years, then these guys aren’t that rich either, and they certainly aren’t living within their means. I spy trouble ahead for these indebted consumers as their human capital rapidly dwindles. The ermine may look poor to Saga, I’ve never bought a new car in my entire life, never mind three after retiring. But I am rich in a way that these silver borrowers aren’t. When I buy consumer goods on credit cards I pay them down in full each month as the statements fall due. Saga’s big spenders are rich in cars and kitchens, I am rich in self-determination. Each to their own.

     

    Notes:

    1. I am very happy to say Saga haven’t yet detected from my spending patterns and personal data held by advertisers that the Ermine has crossed the 50 turns around the sun mark despite me being closer to 60 than 50, I have never received junk mail from them

    Hi. It can be easier to fly under the radar if you are of FI inclination – paying in cash, not being forced to have your life splashed out on the likes of LinkedIn etc., means the corporate Sauron evil eye doesn’t pick you up. [I’m surprised there’s no tracking advertising company called that yet] A lot of people have no clue how much personal info they leak on social media & what a risk that is for fraud as well as just being pestered to Buy More Stuff.

    Re: Saga, as usual in good ol’ rip-off Britain, most entities claiming to bat for any group usually specialise in actually predating or parasitising them – but maybe I’m missing the point & it’s an Orwellian irony thing. [Department/Ministry for the Good of the Elderly ?]

    I’ve always thought there has to be an opportunity in this neoliberal system to re-invent the wheel by putting out excellent deals, whether product or service. You’d most likely be the only one in your industry & once people cotton on, you’d be swamped by the relieved majority, tired of being fleeced. [like Vanguard]

    For Queensbury rules I am on Linkedin so they don’t scrape from that. Though I am slowly asking myself WTAF I am still on there. It’s still the fear an loathing from my runout from The Firm and wondering if I was going to need another job of that sort. I really need to give that notion up sometime. life outside the rat race is too good to get back in!

    Hi Ermine,

    I don’t know how you have kept under Saga’s radar – they caught up with me years ago! I finally crumbled and insured my (old) car with them last year as they were the best value deal. They haven’t got close on property/contents insurance yet though and I can’t see me ever needing one of their loans. (7.9% – no!)

    I can’t decide whether I am surprised or not about the over-50s high spending. It’s easy to keep your head down and just live your life, but the availability of mid-to-upper level technical/management jobs does go south pretty rapidly post-45. I would have thought that the alarm bells would be ringing loudly for anyone pushing 50 that hasn’t got some evergreen skill or a lever keeping them employed.

    Well done in evading Saga. I bought some car insurance from them last year and have been bombarded with communications ever since.

    The insurance reminder came this week with a cheeky 10% mark up from last year being blamed on inflation despite an extra year’s no-claims. Yeah right! Fortunately a quick visit to ones favourite meerkat based comparison site yielded a different supplier at a much lower price.

    That meerkat served me well there too for my car. Nowadays I can only really insure a campervan with two insurers. So I need to switch between them every so often. I was cited £800 from one because I had sold my car and lost 20 years of no claims because it was three years before I insured a vehicle in my own name. So for a relative cleanskin and a high risk vehicle group I was happy to accept £300 fully comp for 0 years NCD.

    I shall avoid Saga – two reports of hounding means I’m prepared to pay extra to avoid that!

    Thank you for the picture of Jenny Agutter.

    hehe, I know it’s gratuitous, but what the hell 😉

    “these over 50s buy three new cars in the decade 50-60 “: dear God, why?

    Beats me – I’ve never bought a new car. Even if I were rich as Croesus I’d rather give the difference in price to my favourite mustelid charity than buy new!

    Like the idea about falling human capital. I haven’t worked in a couple of years after being a high income earner in a specialist sector that has now all but disappeared outside London. I suspect my value has eroded almost completely now that I am staring 50 in the face.

    Thanks to generous tax relief and bloggers such as yourself and MrMoneyMustache keeping me from excessivewy conspicuous consumption I saved efficiency during the period of 2008 to 2014 and was able to hang up my boots. But only due to the Mrs being keen to work, which has prevented the erosion of my stash until I get to 55.

    I wish I had spent less time in my 30s aiming to be mortgage free and more time focusing on my pension but you live and learn.

    When you’re in the swim of things it can be hard to see that. I’ve been outside the engineering scene for five years and despite the odd one-off job here and there I feel the technical side getting stale. Though as a 50-something common practice suggest I should aim more at the system integration and project management side. But they bore me, so I stick with niche design, and I don’t have to make a living out of it.

    The other problem for people into their fifth decade an on is that vacancies appear infrequently and are often specialised, so the statistics are against us. I was surprised in that finished at fifty TV programme how many people seemed unaware of that danger that you’ve described!

    17 Jun 2017, 5:19pm
    by Tony Edgecombe

    reply

    Consumerism is obviously a hard habit to shake off, I predict a lot of pain for these people over the coming years.

    Personally I’m hoping to coax 200,000 miles out of our 2nd hand Skoda during our fifties.

    I’ve only got 145,000 miles on my 2002 Skoda (bought s/h in 2006), still going strong!

    Whoops – 165,000 miles I meant.

    I was chuffed when my Golf got to 120k and thought I was pushing my luck 😉 I did then sell it to a young pup so it wasn’t all out of residual value.

    You Europeans are so light in travel mileage… 160k miles in 10 years and we’re considered low for Americans.

     

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