What caught my eye this week.
Just when you thought pensions had been rehabilitated [1] with the freedom to spend your savings how you like in retirement – and the laudable success of auto-enrollment [2] nudging you there – along comes a conservative think tank ready to bugger them up again.
Not content with his faction bringing us the thermo-nuclear bungle that is Brexit, former Tory ‘leader’ Iain Duncan Smith’s Centre for Social Justice [3] suggest the government withhold the state pension until 75:
The SPA [State Pension Age] should better reflect the longer life expectancies that we now enjoy and be used to support the fiscal balance of the nation.
The SPA in the UK is set to rise to 66 by 2020 (Pensions Act 2011), to 67 between 2026 and 2028 (State Pension Act 2014) and to 68 between 2044 and 2046 (State Pension Act 2007).
We propose accelerating the SPA increase to 70 by 2028 and then 75 by 2035.
There’s a lot to be written about this. For one thing, my co-blogger The Accumulator might have to revisit his fear-de-mongering article on why your pension won’t be plundered [4].
(Oops! Lucky it’s a Bank Holiday @TA!)
More seriously, the CSJ report shows its workings, and it’s hard to come away from it without thinking Something Must Be Done. I also personally happen to like the idea of working indefinitely, in some capacity, professional damp squib to the FIRE brigade that I am. I believe it’s probably healthier for most of us.
However I’d certainly expect to be easing up into my 60s. Perhaps a day or two a week by 70. I’d want to have options. I wouldn’t want politicians forever moving the goalposts away from me like some demented version of football devised by the Greek philosopher Zeno [5].
More darkly, as The Guardian points out [6] there are pockets of the country such as Glasgow where male life expectancy doesn’t even hit the 75-year old mark. And life expectancy isn’t the same as healthy life expectancy, anyway.
An additional fear for the likes of us is that the age when we could access private pensions could also leap.
It’s already set to rise to 57 by 2028. Perhaps you’d be barred until 65 under the CSJ’s regime?
The alternative – wealthy types retiring in their 50s en masse to be served lattes on weekday afternoons by bitter septuagenarians – sounds almost worse.
Existential diversification
Of course this is only a proposal. It carries exactly zilch formal weight. Even Duncan Smith has said it’s not his policy [7], and he’s a Magneto for nonsense.
But I do think it’s a reminder that the rules of the game can and will change again and again.
In just the life of this blog we’ve seen it with everything from the pension lifetime allowance to the taxation of dividends to those who came here from the EU in good faith and lived here for decades being ordered to pay up for the right to stay.
Change is constant, which is why I’m as bemused when I hear people explain their entire strategy is 100% based on pensions as I was when old-time investors told me they eschewed using ISAs because their dividends were [8] tax-free.
Political risk is hard to avoid unless you’re ready and able to move (and let’s not mention expats again this week, eh? 😉 )
But there are pragmatic approaches you can take, such as using various investment vehicles together (ISAs and pensions, at a minimum, and probably also property), keeping your hand in at earning to preserve your human capital, and trying to stay healthy for as long as possible.
As someone should have trademarked: Not everything that can be modeled to two decimal places on a FIRE spreadsheet matters. And not everything that matters can be modeled.
*If only Joe Root could say the same [9].
From Monevator
How to invest as an expat – Monevator [10] [Controversial, several comments [11] add a lot of value]
From the archive-ator: Is your cash safe in the bank? – Monevator [12]
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [13]
Trump “orders” US companies to look for alternatives to China trade partners – BBC [14]
Britain’s most expensive cities are becoming [slightly] more affordable… – ThisIsMoney [15]
…while under-pressure sellers drop prices leading to a pre-Brexit summer sales spike – ThisIsMoney [16]
Small investors in Kevin McCloud’s property mini bonds stand to lose up to 97% – Guardian [17]
More people than ever want to work in asset management, CFA data shows – Institutional Investor [18]
[19]
Most of the rest of the world’s stock markets look cheaper than the US – MSN [20]
Products and services
The deadline for PPI claims is August 29 at 11:59pm [*KLAXON*] – ThisIsMoney [21]
Payday come early: Monzo allows you to receive BACS payments eight hours sooner – ThisIsMoney [22]
Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter [23]
Aunts, uncles, godparents, and family friends can now gift premium bonds to kids – ThisIsMoney [24]
Homes with extra space to let [Gallery] – Guardian [25]
Comment and opinion
The top four portfolios to recession-proof your investments – Portfolio Charts [26]
Financial struggle and the human instinct – The Simple Dollar [27]
If you’re a young investor you should hope for a stock market crash – The Irrelevant Investor [28]
How to make a thousand bucks an hour – Mr Money Mustache [29]
Don’t wait for a life-changing event to change jobs – Fast Company [30]
Monzo, metal credit cards, and bullet journals – Simple Living in Somerset [31]
Which countries have the greatest per capita wealth? – Visual Capitalist [32]
Why you should keep playing offence into early retirement – MarketWatch [33]
Writing wrongs – Humble Dollar [34]
If you’re good with money, don’t get married [IMHO] – Business Insider [35]
Naughty corner: Active antics
Warren Buffett is the greatest investor of all-time – A Wealth of Common Sense [36]
A deep dive into the WeWork IPO – Stratechery [37]
John Hempton on bank stocks and other active nerdery [Podcast] – Odd Lots [38]
Is US market outperformance a result of its sizeable tech sector? – Elm Funds [39]
The downside of discounted cashflow analysis – Albert Bridge Capital [40]
Trend investing protects the downside, but at a cost – Movement Capital [41]
The ‘beach money’ threat to early stage investors – Institutional Investor [42]
Kindle book bargains
The Winning Formula: Leadership, Strategy and Motivation The F1 Way by David Coulthard – £1.99 on Kindle [43]
Essentialism: The Disciplined Pursuit of Less by Greg Mckeown – £1.99 on Kindle [44]
The Miracle Morning: The 6 Habits that Will Transform your Life before 8AM by Hal Elrod – £0.99 on Kindle [45]
The Asshole Survival Guide: How to Deal with People Who Treat You Like Dirt by Robert Sutton – £1.99 on Kindle [46]
Off our beat
Amazon fires: Brazil threatened over EU trade deal – BBC [47]
Diversify your identity – Ozan Varol [48] [via Abnormal Returns [49]]
Will Morrison’s 30p plastic bags end our habit for good? – Guardian [50]
The Athletic keeps on signing subs. An antidote to clickbait media? – Bloomberg [51]
Research suggests too much exposure to bad TV as a child can lead to populism – Guardian [52]
And finally…
“The psychologist Gerd Gigerenzer has a simple heuristic. Never ask the doctor what you should do. Ask him what he would do if he were in your place. You would be surprised at the difference”
– Nassim Nicholas Taleb, Anti-fragile: Things that Gain from Disorder [53]
Like these links? Subscribe [54] to get them every Friday!
- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩ [59]]