The economy is stagnant. Joblessness is rising. The anaemic Government talks but doesn’t act. The banks are hell bent on maximising their profits by paying no interest to depositors and charging eye watering amounts to the lucky few who are able to borrow. Check out the small print on Car Finance Agreements. Chances are the interest being charged is in the high teens.
The over 50’s have the majority of UK wealth. Youth have nothing but student loans and Government debt to finance. This is a mess that needs to be sorted.
The tax system is loaded with inequity. A teenager on minimum wage pays a marginal rate of tax at 32%. An early retiree on an index linked pension of £40,000 pa pays 20% tax.
Politics dictates that this injustice continues. In any fair society the rates would be reversed. Given that this won’t happen it is incumbent on the over 50’s to spend, spend, spend. If you can’t spend it give it away.
In retirement planning the temptation is to try and live off income and leave capital intact. There is an assumption that you can consume as much in the future as currently. Wrong. One pair of slippers will suffice for the final years.
In my experience people save for too long and stop consuming too early. Getting the tipping point right is the trick.
80% of UK wealth is in the hands of the over 50’s. If they save then economic activity is suppressed. They have to spend to create wealth for the next generation.
In oilfield economics a barrel of production lost today isn’t recovered until the end of field life. Given the time scale (say 15 years) it makes the lost barrel worthless. Applying the same principle to the over 50’s means that a quality restaurant meal sacrificed for savings will fund the last spoonful of porridge.
Account Tax Ltd