Renting in the Big Smoke

[radamfi]

You claimed earlier in the Brexit thread that your life had been "destroyed" by Brexit, yet you claim to have retired at 41!

I can hear the tiniest violin playing.

I have been saving hard since I started work and always wanted to retire young. That has meant sacrificing and doing without as I've never been on a high wage. I've never paid higher rate tax. Most people wouldn't retire on the kind of money I have as I'm living off about £8-10K a year. I have learned to be frugal which means I don't need a vast amount of money to retire young.

 

[ChiefPlanner]

To think I felt guilty about retiring at 57 ........however I do worry about how my 3 young adults will get into the housing market , impossible here in St Albans , bad enough renting in London for my nephews - who live in places like Leytonstone and Uxbridge - in shared houses ....often with the smallest rooms to get by.

I am sure lots more would move to London if social housing was available / and -or renting was not so crippling.

 

[Hornet]

My investments (in Euro terms) went down in value. In a post-Brexit future, I won't know how much money I will need as residency in the future might be linked to net worth. Also, I might need to fork out for full priced medical insurance if reciprocal health arrangements cease.

You must have been almost wiped out around Christmas 2008 then. (€/£ almost at parity)

 

[Bromley boy]

You're missing the point. It's not about comparing yourself to other people and finding you have a less luxurious lifestyle. It's termed relative, because in a first world country, you are far less likely to be homeless and hungry than in a third world country. You may be poor relative to the standards you might reasonably expect in a first world country - say, the resources to procure a home in reasonable condition, that you can afford to furnish and heat, afford suitable clothes for work or your children's school uniform, afford to use transport, be able to buy decent food, in short, to be able to participate in the society you reside in. Take food as an analogy. Buying basics goods when your neighbour buys the premium range is not relative poverty. Living on basics beans on toast and skipping meals because you cannot afford a balanced diet including fresh fruit and vegetables is relative poverty.

I understand the point, I just don't agree that "relative poverty" is a particularly useful definition. Particularly as the media/politicians with an axe to grind never distinguish between absolute and relative poverty.

Remember, in this thread we are discussing someone choosing to move to one of the most expensive areas in the uk, thereby potentially placing themselves into a situation where they may struggle to afford the rent - should this really be described as "poverty"? If it fits the definition of "relative poverty", and it might, doesn't this show the definition isn't really fit for purpose?

As for people living on beans of toast, skipping meals, I rather suspect this is often down to bad choices. I'm not saying people don't fall on hard times but in this country we have free at the point of use healthcare, you can walk into a supermarket and buy a couple of kilos of pasta and sauce for less than a fiver, we have a comprehensive safety net in terms of the benefits system etc.

This situation is of course different to that of the homeless and those who genuinely fall through the cracks in society, for whatever reason, who could more usefully be described as being in poverty.

 

[Bromley boy]

I have been saving hard since I started work and always wanted to retire young. That has meant sacrificing and doing without as I've never been on a high wage. I've never paid higher rate tax. Most people wouldn't retire on the kind of money I have as I'm living off about £8-10K a year. I have learned to be frugal which means I don't need a vast amount of money to retire young.

Assuming you started work at 22, retired at 41, having never earned a salary sufficient to pay higher rate tax, and have a life expectancy of 90.

Even accounting for frugal living, in the absence of a substantial windfall or other source of income, is it reasonable to expect to expect 19 years of work to pay for 49 years of retirement?

 

[radamfi]

Assuming you started work at 22, retired at 41, having never earned a salary sufficient to pay higher rate tax, and have a life expectancy of 90.

Even accounting for frugal living, in the absence of a substantial windfall or other source of income, is it reasonable to expect to expect 19 years of work to pay for 49 years of retirement?

If you withdraw 4% every year then your money should last you for the rest of your life. (Search for "4% withdrawal rate"). It doesn't matter how long you live. Basically, you need to save 25 times your annual expenditure. So if you spend £10K a year then you need to have saved £250K.

If you live beyond retirement age then you will also get some state pension. Not the full pension as you won't have worked enough years. But in the unlikely event of the 4% withdrawal rule failing, you have a backup.

 

[Bromley boy]

If you withdraw 4% every year then your money should last you for the rest of your life. (Search for "4% withdrawal rate"). It doesn't matter how long you live. Basically, you need to save 25 times your annual expenditure. So if you spend £10K a year then you need to have saved £250K.

If you live beyond retirement age then you will also get some state pension. Not the full pension as you won't have worked enough years. But in the unlikely event of the 4% withdrawal rule failing, you have a backup.

But taking into account rent/mortgage living costs - even stripping out luxuries - £250k savings from £30-40k income per year * 19 years is no mean feat!

Hats off to you for doing that if you have managed it! I know I couldn't.

EDIT: also 4%pa on £250k sounds optimistic - certainly for cash, maybe rental yield from a property? Something to aspire to I guess!

 

[EM2]

As for people living on beans of toast, skipping meals, I rather suspect this is often down to bad choices. I'm not saying people don't fall on hard times but in this country we have free at the point of use healthcare, you can walk into a supermarket and buy a couple of kilos of pasta and sauce for less than a fiver, we have a comprehensive safety net in terms of the benefits system etc.

That's assuming you have a fiver to spend. It can be very expensive to be poor.

A four-pint bottle of milk costs less than four one-pint bottles, but you don't have enough to pay for the four-pint bottle.
Own-brand cola or lemonade costs even less, but is full of sugar.
Healthy food costs a lot more. Noodles or beans might be cheap, but they're nutritionally terrible.
'Buy one, get one half price'; not a lot of use if you can only afford the one.
Good quality shoes that last a couple of years could be £30-£40, but you haven't got that so you buy £10 ones that last a few months if you're lucky, and the same goes for shirts, trousers, jumpers etc.
And when you get a job, it's cheaper to get the season ticket (even if it's a weekly) but until you get paid, you can't afford to buy it, so you have to buy more expensive singles/returns, assuming that there's even suitable public transport where you live.
If you're lucky enough to afford a cheap car, paying your VED and insurance monthly is more expensive than paying up front. You have to buy budget brake pads that don't last as long.
Pre-pay meter for your utilities? That'll be a higher tariff, please.

If you want a real-life illustration, have a search for Jack Monroe.

 

[radamfi]

But taking into account rent/mortgage living costs - even stripping out luxuries - £250k savings from £30-40k income per year * 19 years is no mean feat!

Hats off to you for doing that if you have managed it! I know I couldn't.

EDIT: also 4%pa on £250k sounds optimistic - certainly for cash, maybe rental yield from a property? Something to aspire to I guess!

Most studies of withdrawal rates usually assume a mixture of shares and bonds after retirement. Before retirement you would generally have most of your money in shares as they have a higher average return. 7% pa is often used a typical stock market return over the long term.

Saving £7,000 a year with an 7% return would give you £260K after 19 years. A lot of people could easily save £7,000 a year if they didn't spend it on kids, cars and iPhones.

 

[RichmondCommu]

You've said this on a previous thread, however you admitted that you will be retiring in the near future, well before standard retirement age, so you presumably could continue to work if you want to.

The key difference is that when I stop working my wife and I will not be seeking state support. My wife and I will continue to work as volunteers in order to give something back to society and to help those who have given so many hours of enjoyment over the last 25 years.

 

[ainsworth74]

I know quite a few volunteers who are on benefits whilst doing voluntary work. Should they not feel fulfilled because they're on benefits?

 

[RichmondCommu]

I know quite a few volunteers who are on benefits whilst doing voluntary work. Should they not feel fulfilled because they're on benefits?

I assume that they are actively seeking full time paid work whilst they are volunteers?

 

[RichmondCommu]

To a point, yes. But when you work hard, are constantly tired, have no leisure time (or leisure money), are barely able to put food on the table and are no better off month on month that self-esteem starts to wear a little thin.

In which case you aspire to something better than what you already have.

 

[ainsworth74]

I assume that they are actively seeking full time paid work whilst they are volunteers?

Some do and some don't.

 

[RichmondCommu]

Some do and some don't.

In all fairness I have no time for those who are claiming benefits and volunteering but not actively looking for paid work. Essentially they are taking the **** out of everyone else who is working and paying into society.

 

[najaB]

In which case you aspire to something better than what you already have.

It's difficult to aspire when you're busy surviving.

 

[the sniper]

In all fairness I have no time for those who are claiming benefits and volunteering but not actively looking for paid work. Essentially they are taking the **** out of everyone else who is working and paying into society.

These people can probably be contributing more to society volunteering for dole money than doing some of the worthless or counter productive to society paid jobs that are out there...

 

[RichmondCommu]

It's difficult to aspire when you're busy surviving.

To not aspire to something better shows a lack of ambition. If you're bored at work think of something better to do.

 

[RichmondCommu]

These people can probably be contributing more to society volunteering for dole money than doing some of the worthless or counter productive to society paid jobs that are out there...

Then again they probably can't. Why not have a job that pays you a wage and volunteer during your spare time?

 

[GusB]

I know quite a few volunteers who are on benefits whilst doing voluntary work. Should they not feel fulfilled because they're on benefits?

The problem there is that The System does not recognise voluntary work as having any real economic benefit. At the very end of the 90s I ended up on the then New Labour's "New Deal" programme. I'd been unemployed for some time after a bit of a breakdown, and I ended up going down the voluntary sector route. I was given a placement with a "community enterprise company". It was cheap labour for a company that was providing services that had been withdrawn by the local authority because of funding cuts. I knew that, but it gave me a) something to get up for in the morning and b) a little bit of pride in that what I was doing made a difference to the lives of people who had it far worse than me.

In all fairness I have no time for those who are claiming benefits and volunteering but not actively looking for paid work. Essentially they are taking the **** out of everyone else who is working and paying into society.

To be honest, I find this quite insulting. Throughout my time on the New Deal programme I was suffering from quite severe depression. Nevertheless, throughout that time I continued to sign on as if I was "fit and available for work", despite it not really being the case. I realised that sitting on my arse wasn't going to get me anywhere. Eventually I was offered a job by the very same Community Enterprise Company (I realise now that they were probably offered a Job Outcome Fee, but hey I was naive at the time).

For people who have long-term or chronic health conditions, volunteering can be as valid a route back into work as any other. Some people may be able to carry out some activities, but aren't quite ready to go back into full- or part-time employment. What's wrong with claiming benefits and volunteering if the end result is an up-to-date reference and "keeping your hand in", while not necessarily earning a "proper" wage?

I will also re-iterate that many people in these volunteer positions are carrying out valuable social functions that local government have long since abandoned.

 

[EM2]

To not aspire to something better shows a lack of ambition. If you're bored at work think of something better to do.

It's nothing to do with being bored at work.
It's to do with spending every single waking minute thinking if you've got enough money to eat tonight, to get to work tomorrow, to get the new shoes that your child needs, if you can pay that electric bill before the final notices, if you'll be lucky enough to get some hours next week and actually earn some money.

 

[radamfi]

The key difference is that when I stop working my wife and I will not be seeking state support. My wife and I will continue to work as volunteers in order to give something back to society and to help those who have given so many hours of enjoyment over the last 25 years.

So it is nothing to do with work giving you self-esteem. What about people living off inherited wealth so have never needed to work?

 

[AlterEgo]

So it is nothing to do with work giving you self-esteem. What about people living off inherited wealth so have never needed to work?

People who live off inherited wealth and who don't work at all are surprisingly few in number.

I think RichmondCommu was angling at people who see volunteering in lieu of paid work as a lifestyle choice, though I cannot speak for him.

Personally, I think people who make a choice (rather than being forced through circumstance) to volunteer in lieu of paid work aren't clued up as to how society works. Think - Q:"what would society be like if everyone did what I did?" A: on it's arse. Don't get me wrong - volunteering is extremely valuable and forms a significant part of the bedrock of British society, but it should not be a replacement for remunerative work, with volunteers living off benefits paid for by people who do jobs they don't like.

If I was forced through circumstance to be out of work and volunteering instead, I have to admit my self-worth would take a knock. A lot of people take great pride in working hard at what they do, paying tax, and contributing to society. Frankly I'd be wondering why I wasn't getting paid for my valuable efforts. That feeling might not be the same for everyone, I recognise.

You can of course be in remunerative work *and* volunteer, which is what a lot of people do. The two aren't mutually exclusive.

 

[najaB]

Personally, I think people who make a choice (rather than being forced through circumstance) to volunteer in lieu of paid work aren't clued up as to how society works.

If someone is performing useful work then society benefits regardless of if they get paid or not. Equally, someone can be in paid work and produce zero net benefit to society (other than, perhaps, some tax take).

Paid work is not always better than volunteering.

 

[AlterEgo]

If someone is performing useful work then society benefits regardless of if they get paid or not. Equally, someone can be in paid work and produce zero net benefit to society (other than, perhaps, some tax take).

Paid work is not always better than volunteering.

Taxation is very important, because this way the individual contributes to the upkeep of society as a whole. Like most people, my tax and NI goes towards the maintenance of infrastructure, our defence, emergency services, the NHS, in fact if it's part of the fabric of our society no doubt I am making a contribution. I'm also contributing to paying the benefits of other people, which I do not begrudge unless they are making a lifestyle choice to rely on those benefits.

Thus, if you are relying on benefits, and volunteering, have a think about what would happen if we all did that. Where would your benefits come from? (Typing this I'm wondering why we term them "benefits" tbh).

As I've said, volunteering - the giving up of free time and resources with no expectation of benefit to self - is a fundamental cornerstone of British society. But we need to ask ourselves why people are full-time volunteers, and why they're not being paid for their work if it's valuable, and why our benefits bill is being used to finance this. Surely this is not the way society ought to work.

 

[EM2]

But we need to ask ourselves why people are full-time volunteers, and why they're not being paid for their work if it's valuable, and why our benefits bill is being used to finance this. Surely this is not the way society ought to work.

Take a look at Citizen's Advice as an example. They have roughly three times more volunteers than paid staff.
If they all got paid, where would that money come from?

 

[AlterEgo]

Take a look at Citizen's Advice as an example. They have roughly three times more volunteers than paid staff.
If they all got paid, where would that money come from?

Are their volunteers full-time and living off benefits?

 

[ainsworth74]

In all fairness I have no time for those who are claiming benefits and volunteering but not actively looking for paid work. Essentially they are taking the **** out of everyone else who is working and paying into society.

I see and what about those that aren't well enough to do paid work and therefore are not required to actively seek it? Those I mentioned that aren't actively seeking work fall into that category.

 

[najaB]

Thus, if you are relying on benefits, and volunteering, have a think about what would happen if we all did that. Where would your benefits come from? (Typing this I'm wondering why we term them "benefits" tbh).

I fully understand that, I'm just saying beware of blanket statements. It's not hard to come up with scenarios where society is better off for someone volunteering while on benefits.

For example, someone who has carer duties which mean they can't hold down a regular job. If they are low-skilled then the tax and NI on their earnings would be less than the cost to the State of providing care for their relative.

 

[ainsworth74]

Are their volunteers full-time and living off benefits?

Not usually (though they certainly could be as there is sufficient demand) and it varies on individual circumstances. Some are, some aren't.