Pensioners go back to work to survive 

An every growing army of pensioners are heading for work in retirement. Scrapping the barrel they need the extra cash. One opportunity to avoid that trap in the future would to secure a residual income.

How many people do you know who are maxing out on their credit cards, spending like there's no tomorrow and have never considered what life might be like when they are a pensioners? On a couples allowance of £139.60 per week, I can't imagine that a pensioner's life is easy or a great deal of fun.

How often have you heard people say: "I'll get round to that when I retire" or "I'll spend more time with the family when I retire." or "We can take that holiday of a lifetime that we have always dreamed of, when we retire "or "I'll have time for those hobbies when I retire."?

Current food and grocery shopping advice for UK Pensioners: order groceries online to avoid the temptation of buying extra items; become vegetarian and grow your own veg - vegetables are cheap; withdraw your week's money in cash and leave your debit card at home; shop in charity shops and on eBay and use Freecycle.

You only have to consider a few recent headlines to see the truth:

MORE than 2.8 million pensioners are going back to work because they cannot survive on their retirement income, new research has revealed.

Although the average income for retired households rose in 2003, Prudential, the insurance company, found that the increase did little to offset the drop in income that pensioners suffer when they retire.

According to Prudential’s Retirement Index, one in four people who retire are forced back into the workforce because they cannot make ends meet on the average annual pension household income of £14,648. The annual survey calculated that the newly retired see their income fall by £4,164.

Many pensioners contemplate desperate measures to boost their income in retirement. Nearly a quarter of a million said they would commit or consider committing a crime — twice as many as the year before. Others have been forced to scale back their spending.

The  Prudential, said: “This research reveals that without serious and sustained financial planning while at work, a full-time and comfortable retirement is becoming an unobtainable dream.

“It simply doesn’t add up any more to expect to save a minimal amount for 20 to 35 working years and expect to have the same standard of living for the next 20 to 30 years in retirement.”

The times has commented in the past on this subject. Read this article below and then visit www.savings4u2.co.uk for your residual income opportunity.

When you realise that this article is about pensions you may be tempted to stop reading. Please, please don’t. Gordon Brown is counting on you looking away.

For a decade the chancellor has relied on our instinctive revulsion for the topic. Pensions are complicated. They force us to think about ageing. Raising the subject naggingly reminds us that we are saving too little. We would rather turn the page; and that is why Brown has escaped unhurt while our pensions system has collapsed.

At last he is taking some blame for it. Having decided 10 years ago to increase by £5 billion a year his tax take from pension funds, he is being attacked because warnings given to him at the time by cautious civil servants have been published. It is amusing that Labour ministers are hoist by the freedom of information legislation that they once drafted enthusiastically.

However, economists have popped up in the press denying that Brown’s tax grab is the principal reason why final salary pension schemes have withered. Changes made by the Tories before him, for example in response to the Robert Maxwell scandal, are argued to be at least as significant.

Well, if it is true that decisions taken by Brown’s predecessors had weakened the pensions system, then his misjudgment in sucking money from it appears worse, not better. He should have considered what additional burden our enfeebled funds could bear. Also, while it is seductive to argue that pension funds worth £1,000 billion could hardly have been laid low by an impost as tiny as £5 billion a year, if you take £5 billion every year for 10 years, after a while, as they say, you are talking serious money.

The bigger question is why, once the pensions disaster had become apparent, Brown took no corrective action. Let us grant that in his first years the chancellor controlled public spending tightly, the stock market was healthy and pensions showed few signs of strain. But from about 2000 public spending was growing massively, the value of British shares plummeted and final salary pension schemes began to slam their doors to new entrants. Since 2000 the catastrophe has rolled out inexorably while Brown has sat on his hands.

One reason is that thanks to the lack of interest in pensions among the media and public he felt little political pressure to act. Second, he was by then hooked on the money. The annual £5 billion was essential fuel to keep public spending roaring forward. Third, even to mitigate the effect of his tax raid would be to own up to error. The impoverishment of millions of pensioners was a price worth paying to avoid any such admission.

Tony Blair argued last week that Brown’s original decision had been good for pensioners and for the economy. On the contrary, it was clearly bad for pensioners, the only dispute being how significant it has been in the overall debacle. To contend that it was good for the economy you would have to believe that the money was better spent by the government than it would have been by the pensioners from whom it was taken. That sounds very old Labour and since the government has flooded the public services with cash so unproductively, Blair’s point is unsustainable.

Harking back a decade may be worthwhile if it finally establishes Brown’s guilt, but it risks distracting us from the bigger calamity to come. On Brown’s own figures three-quarters of pensioners will be dependent on means-tested benefits by 2050. That is partly due to the shrinking private pensions system, but also because the basic state pension is so low. The latter has large implications for what will happen next.

The government is wrestling with what to do about millions who have no pension or who save little. It favours auto-enrolment, a system that will require employees to be in a pension scheme and benefit from employer contributions, unless they opt out.

Unfortunately, if workers have low earnings or long periods without a job, what they pay into the scheme over the years may be too little to raise them above dependence on means-tested benefits when they retire. In that case they will be worse off for having saved (because they did not buy things with the money while they had it). Only the government will have benefited, by pocketing their contributions.

If people get wise to that, there will be a mass opt-out. If they do not spot the trap, they will then have a grudge (and maybe a legal case) against the government for luring them into pointless saving that made them poorer.

The problem gets worse. The government would like people to invest largely in shares since normally equities give the best return over a long period. But stock markets are risky up to a point.

So ministers might need to offer an entirely risk-free alternative from which, sadly, the returns would necessarily be low. Research shows that uneducated investors usually opt for the lowest risk. If they do that, then the chances of their savings being wasted will grow.

Were the basic state pension much higher than it is, most pensioners could be floated above the threshold for means-testing. Then any income from their contributory pension, however meagre, would be theirs to enjoy, not to be clawed back by means-testing.

Inequality on a scale unknown for decades now looms for Britain. If the basic state pension continues to be linked to prices, it will be worth about a 10th of average earnings in 30 years’ time, so those in work will be markedly better off than those who have retired and many will suffer a huge fall in living standards when they do retire. Even among the low savers, those who are lucky, perhaps because they inherit a house from their parents, will be lifted far above their peer group.

It is hard to see how such inequality will be socially or politically acceptable. Yet because pensions are an arcane subject, and because the worst effects lie some years ahead, Brown is content not to act.

The British scene is in marked contrast to the rest of Europe. By the middle of this century pensions will be costing the British state a bit more than 4% of GDP, which will be a quarter of the figure for Germany or Spain.

You might think that would make any Thatcherite beam with satisfaction. While our continental competitors sweat under an enormous public sector pensions burden, British companies can be lightly taxed.

On the other hand, even in the mid-century German or French workers may be retiring on pensions worth fully half of what they earned in employment. The poverty experienced by most British pensioners will be matched only in poor countries, if at all. Again, it is doubtful whether the British politicians of the day will be able to endure the sense of shame.

The British system might still be all right if final salary schemes had survived or if we were a nation of big savers. In fact we are the least prone to put money aside and since the chancellor taxes interest on anything that we do save, profligacy seems economically rational.

That contrast between continental Europe and Britain poses the issue of what sort of country we want to be. To an extent that he would not wish to admit, Brown has accepted the Thatcherite model, even though the assumption (a buoyant private pensions sector) on which Margaret Thatcher based her policies has changed.

Given Brown’s unwillingness to admit errors, perhaps the new Tories are in a better position to consider the following questions objectively. Should we continue to hold down public spending on pensions, even at the risk of greatly increased social inequality? Or should we bolster the living standards of the old at the cost of expanding the state?

After all these years we need to ask: which produces greater happiness and social cohesion — the Thatcherite model or continental European social democracy? Brown’s answer we already know. But David Cameron’s answer we await with interest.

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Residual Income

Residual Income, is the answer most multi-millionaires will give you when you ask them the secret of how they became so rich.

Residual Income is a powerful tool, once you have done something you continue to get paid for it. It is like the royalties that an author gets after he has written a book.

Change in your mind, the meanings you’ve created about money. Look at what’s "real" for you about money, and then ask yourself, does a billionaire see this the same way? Be a billionaire for a day and work backwards.

What on earth is residual income? You are still asking yourself?
It’s your best friend that you didn’t know. It’s money that takes something to setup and will payout, residually. What’s the benefit?

Most university students that I know have two things going for them. One, a perspective on money, like "money is scarce."

Secondly, a relationship to money that their time equals money, at a one to one ratio. Like, "every hour I work, I make £8."

This is the way most people operate, including many executives, professionals and more than likely you. There is nothing wrong with it, except if something comes between you and your work.

The way I’ve set myself up is doing something that is residual. It can be as simple as purchasing one stock and getting a £2 dividend quarterly, Or setting up a company and letting it run without you.

Multi-level marketing (MLM) companies usually only deal with residual income. Having a residual income means that you could barely work or not work at all in a month and bring in sufficient income to support yourself and your family. You build up your residual income by following the plan and working on your terms once you’re set up. Then once you have sufficient cash flow, reinvest it in additional residual opportunities that will create even more money.

It’s how many people retire earley and it’s how every billionaire I read about their billions. Money no longer is a barrier, especially if you slowly but surely diversify the residual Income opportunities in your personal portfolio of opportunities. If one buckles, you’ve got residual income coming in from other sources. You can set up as many residual income projects as you like.

So how do you do it? Seek opportunities that will make you money without you being there. Start a company and pay people on commission and have them do all the work. Create a business that makes an ongoing return perhaps through technology instead of labour intensive. Join a MLM company that offers a compensation plan which pays you a residual income.

One company has invested into research and development for a new technology that has paid for itself in under four months. They receive a cheque for what they created, every month this has created a residual Income.

Look for opportunities that are a utility. Like your phone, hydro or other stuff that once your clients signs on, they aren’t likely to get rid of or stop using. Utility warehouse discount club is one such opportunity.

Although I still have difficulty taking in all of the aspects of Multi-level Marketing (MLM) companies, some are great. If you Google "MLM" and see what pops up, it will give you an idea of how many MLM companies are out there.

The beauty with MLM companies is that even if you don’t sign up, the format of their company and how it operates will teach you a lot about how you could operate your own venture.

By retirement, I will have built up sufficient residual income that I don’t need to worry about money for the rest of my life. I only wish I had found out this secret many years ago.

So, don't you miss the boat, don't stay in that nine to five trap, do something about it, if you would like to find out more visit www.savings4u2.co.uk