Weekly Roundup, 25th April 2017

Weekly Roundup, 25th May 2017

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2 Responses

  1. Hi Mike, thanks for the round up.

    I want to mildly argue about the £70k rich thing (sorry!).

    First of all, and I know this is nothing to do with you, “rich” surely relates to wealth, not income, although I can see that there’s some crossover, and from a political and taxation point of view income is easier to work with and talk about.

    Second, I’d have to disagree with your £70k retirement calculations though. If the £20k savings goes into a SIPP then it goes in gross rather than net of tax, which I guess would massively improve the final retirement pot.

    Third, even if the final tally was £800k then as far as I can see that’s a huge retirement pot. My parents had not even a quarter of that amount and live an entirely reasonable lifestyle, probably better than most pensioners. Their house is bought and paid for so overheads are very small, and are easily covered by their annuity payments and the state pension. So I, along with most people (I expect), would consider an £800k retirement pot “rich”.

    Also, from an income point of view, having earned a variety of incomes in the last decade or so from £20k to £90k, I would definitely class £70k as rich. Unless you live in a mansion or somewhere daft like central London, £70k gives you huge discretionary spending power, at least relative to 90% of “normal” non-rich people.

    Anyway, sorry for being negative, devils-advocate and all that!

    John

    • Mike Rawson Mike Rawson says:

      Hi John,

      Devil’s advocates are always welcome. I agree with you that rich = wealth (at least in so far as you need the wealth to provide an income to live on).

      I think the point about tax is debatable. First, up to half of the savings are being used to buy a house, with no tax relief available.

      Second, though I personally would use a SIPP and end up with more money, there have been so many changes to the pensions system over the past 12 years that a lot of younger people prefer not to lock their money away for decades. They will use ISAs instead, with no tax relief.

      £800K is not a huge retirement pot. At say 3.3% pa withdrawal rate (safe for the UK), it produces an income of £26.4K. That’s not rich.

      Income is trickier. Whether £70K pa provides a good lifestyle depends on your lifestyle choices. After tax and savings you are really living on about £30K pa. That’s enough for me these days, but I doubt that I would have been too happy between the ages of 25 and 40.

      People will always disagree about what words like “rich” and “equal” and “fair” mean. The real problem with Labour’s policy is that discouraging people on £70K and up isn’t good for the country.

      Mike

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Weekly Roundup, 25th April 2017

by Mike Rawson time to read: 7 min
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