Lies, Damned Lies and (the misuse of) Statistics

Topical debate, moral dilemmas and quirky questions. Join fellow shareholders in civilised discussions of issues of interest

Lies, Damned Lies and (the misuse of) Statistics

Postby blythburgh » Fri Sep 14, 2018 9:33 am

I read this in am email, full article here: https://www.moneywise.co.uk/news/2018-0 ... 40918%20(1)&utm_content=

State Pension Shortfall Day: Couples on state pension run out of money
Figures from the Office for National Statistics (ONS) show that the average retired couple’s spending is around £25,500 a year, while two full state pensions provide just £17,092.

This leaves a shortfall of £8,367 a year, meaning retired couples will have to plug the gap with their own savings or private pension.


Who are these pensioners who are the average? Do they really need to spend £25,500 a year to have a decent life?

I mean they have no children to raise, the "average" pensioner is the one most likely to be a homeowner with no mortgage to pay.

Take the average under 40, children to raise, mortgage or rent to be paid. I bet they would love to have £25,500 a year after the mortgage/rent, childcare and all the other costs of having children is paid. And of course the food bill for a family of more than 2 will be higher than that of a 2 person pensioner household.

But there are also these sad facts in the article: “Four in 10 pensioner homeowners eligible for state support are failing to claim any benefits, while a further two in 10 are not receiving their full entitlement – this can add up to a few hundred, and in some cases a few thousand, pounds a year that would make a big difference to people’s lives. These will be the ones who are having to choose between heat and food in the winter.

And frighteningly “We know that seven in 10 access their pension before age 65 and that accessing pension pots early has become ‘the new norm,’ yet this could significantly reduce the amount of income people can achieve in later life.”

The Government, stupidly IMHO has allowed people to withdraw money from their pension pots and many will live to regret that decision.

Then there is what to me is the new PPI, withdraw money from your property. Basically it is a mortgage where the amount you owe grows year on year as you do not even pay the interest on the loan. What will happen if house prices do not grow fast enough? Or when the next house price crash happens, and it will happen at some point no matter what the Brexit outcome is.

And of course for the unlucky ones most of the value of the property will be used for care costs in a home for the elderly.

If there is little equity available when the property is sold then the cost will fall on the taxpayer.

Today's under 40's have less job security, lower real pay than 10 years ago, if they can get a mortgage the cost of the property will be many times in real terms what today's pensioners paid.

So do I feel sorry for those who pensioners who have £25,500 a year to spend? Of course no. My sympathy goes to those who struggle to eat and heat. Many of them will be pensioners but many others will be in full time work.
Keep smiling because the light at the end of someone's tunnel may be you, Ron Cheneler
blythburgh
 
Posts: 13412
Joined: Tue Jun 29, 2010 6:14 pm
Location: The Far East
Has thanked: 34045 times
Been thanked: 7022 times

Re: Lies, Damned Lies and (the misuse of) Statistics

Postby pabenny » Fri Sep 14, 2018 12:59 pm

I'm not quite sure what point you are trying to make by the title of your post.

I don't see any obvious falsehood or misused statistics in the article that you quote.

True, it is somewhat ingenuous to compare the State Pension (effectively the minimum income that people will have in retirement*) with the average (presumably median) expenditure of retirees. But it does make the point that the State Pension alone may not be enough to fund the lifestyle that people may want/expect in retirement - and therefore we should all ensure that we are saving for that stage of our lives.

Is it a good thing to allow people to withdraw their pensions savings? I haven't seen any evidence one way or the other. It certainly carries an immediate benefit to the economy as the withdrawn funds are spent and from taxes charged. I couldn't say whether this outweighs any future costs to the state should these people be unable to fund care having spent their pension savings.

To be clear, authorised withdrawal of pension savings is wholly different from 'pensions liberation' which is almost always a very bad move.

As for equity release..."What happens if house prices do not grow...or.. crash?" - the lender loses out. That's the deal. That's why the younger the borrower, the lower the loan to value. Is it being mis-sold? I don't know. It's clear that the finance sector has more regulatory scrutiny than ever and the FCA are more willing to address poor behaviour.

-----------------
* For those not entitled to a full state pension because of an incomplete contribution record, Pension Credit will cover the shortfall - although this is means tested and does have to be claimed. Doubtless there are some cases where people can't get Pension Credit.

Thanked by: blythburgh
pabenny
 
Posts: 885
Joined: Tue Jun 29, 2010 4:21 pm
Has thanked: 401 times
Been thanked: 1264 times

Re: Lies, Damned Lies and (the misuse of) Statistics

Postby expressman33 » Fri Sep 14, 2018 1:33 pm

I have often said before that averages don't mean that much
If 1 person earns £1,000,000 per year and 99 earn £10,000 per year , then the average is £19,900

A better comparison would be to use the median value which in this case would be £10,000

Thanked by: blythburgh
expressman33
 
Posts: 8830
Joined: Tue Jun 29, 2010 9:36 pm
Location: stockport
Has thanked: 2581 times
Been thanked: 10707 times

Re: Lies, Damned Lies and (the misuse of) Statistics

Postby Constantine » Fri Sep 14, 2018 4:36 pm

blythburgh wrote:....

Then there is what to me is the new PPI, withdraw money from your property. Basically it is a mortgage where the amount you owe grows year on year as you do not even pay the interest on the loan. What will happen if house prices do not grow fast enough? Or when the next house price crash happens, and it will happen at some point no matter what the Brexit outcome is...


It's not the new PPI. I see no evidence of equity release being mis-sold.

Equity release works on the basis that you retired and have a house worth £200k. A lender will advance something like £60k at 6% and roll up the interest. What will happen if house prices do not grow fast enough? Not a lot really. The lender might not make as much profit as it hoped. Perhaps the eventual sale proceeds won't be enough to repay the loan.

Are you worried that L&G or whoever is going to go bust or what?


blythburgh wrote:....
If there is little equity available when the property is sold then the cost will fall on the taxpayer....


People with money are expected to pay for their own care. There is always the 'risk' that they decide to blow their money on having a good time before they need to be shuffled off to te Bidawee care home. Equity release is simply one mechanism for blowing your wealth on sex and drugs and rock n roll before your dotage. So what?

I'd be more concerned about the fact that the ageing population means that the taxpayer is going to have to find another £170bn or so a year by 2045ish to pay for the NHS and social care.

Thanked by: blythburgh
Constantine
 
Posts: 543
Joined: Fri Jul 02, 2010 12:04 pm
Has thanked: 70 times
Been thanked: 597 times

Re: Lies, Damned Lies and (the misuse of) Statistics

Postby pabenny » Fri Sep 14, 2018 8:33 pm

expressman33 wrote:I have often said before that averages don't mean that much
If 1 person earns £1,000,000 per year and 99 earn £10,000 per year , then the average is £19,900

A better comparison would be to use the median value which in this case would be £10,000


That's the point of the median - the mid point if you line everyone up from highest to lowest.

Thanked by: blythburgh
pabenny
 
Posts: 885
Joined: Tue Jun 29, 2010 4:21 pm
Has thanked: 401 times
Been thanked: 1264 times

Re: Lies, Damned Lies and (the misuse of) Statistics

Postby Sarah » Sat Sep 15, 2018 1:32 am

If you're a pensioner with significant savings then of course you're going to want to spend them (or give it away). Why else have you been saving all your life but for security and comfort in old age... you can't take it with you when you die!

Anyone who thinks all pensioners are living on the breadline must surely have never visited a branch of M&S Food, looked at the prices and observed who is paying them! :idea:

Thanked by: blythburghkevinchess1
Sarah
 
Posts: 2349
Joined: Sat Jun 26, 2010 9:01 am
Has thanked: 209 times
Been thanked: 1761 times


Return to Life's little questions

Who is online

Users browsing this forum: No registered users and 2 guests