Fly me
by Doug Brodie
In this blog:
/1. This is significant
/2. We’ve got company
/3. Retirement: got any plans?
/1. This is significant
In 2000 the US national debt was $5.6 trillion. Now it’s $31 trillion and growing at $3 billion per day. Across the entire 300 million population that is roughly $100,000 of debt per head, and the projected interest bill in 2033 is $1.2 trillion per year.
The national debt of the US is today-ish $33 trillion, 8.8 times more than China at $3.7 trillion and 11 times more than the UK’s $3 trillion. Interest rates are killers because they suck money away from capital and consumer spending into banks and shadow banks. (All data CEICdata.com). Conversely, inflation will make those debt sums less as a percentage of national revenue and national assets, so its easy to see how a dangerous balancing act falls to the central bankers and politicians.
/2. We’ve got company.
Standard Life used to be a stalwart in the UK pension industry having been founded in 1825, however it was sold in 2018 to Phoenix Group for £2.9 billion, who also acquired the brand.
As head of individual retirement, Claire Altman is a big fan of annuities, a product manufactured by Standard Life, and in the trade publication Pensions Expert she writes that such contracts can be blended with other sources of income:
“Increasingly, we think that people will use combined approaches to securing income, helping to balance out the need for certainty with the desire for flexibility. We think that we’ll increasingly see guaranteed portions of an income used to cover essential expenditure, with non-essential expenditure covered by drawdown. This allows people to balance out certainty and flexibility, ensuring they've got the basics covered while keeping a proportion of their money invested. Furthermore, securing the guaranteed portion of the income could be undertaken in stages, to take advantage of improving annuity rates as people get older. As well as giving people flexibility, this could also act as a good inflation hedge, which is particularly important in current times.”
The main attraction of annuities is the certainty of income. In the US, somewhere between 3 and 5 annuity companies have gone bust in the last ten years, including Time Insurance Company in 2020 (Wisconsin). In the UK annuities are covered by the FSCS (Financial Services Compensation Scheme) which happens to be funded by Chancery Lane, amongst many others, so you should know that part of the fees that we charge are simply to raise the levy for the FSCS – they use your/our money to compensate those whose providers/advisers have gone bust.
/3. Retirement: got any plans?
Having the time on your hands, and the money to buy all the necessary tools, many retirees decide to build something – treehouse for grandkids, garden ‘house’ for aged parents, or a boat perhaps:
Few of us have a barn as big as that of 70 year old as Michael Danesi’s; not only the boat, Michael also built the barn first, custom to fit the boat. Michael reckons it’ll take him five years to build the boat –
“Building the boat is actually the journey; if I get to go out on it one or two times that’ll be fine for me.”
His wife commented that she’d like to sail to France when it’s finished.
Cheryl & John Ellsworth took the reverse approach, choosing to buy their Oyster 56, Sea Mist, which was their home for eleven years through their 60’s. https://oysteryachts.com/oyster-life/retirementthe-way-it-should-be/.
“We set out from the beginning with the aim of spending the ten years through our 60s in this life, and then, for our 70s, return to land and establish a land home under the cover of socialised medicine in Canada. As we well knew that later years’ health issues might command our path by then."
John and Cheryl starting preparing three years before retirement by downsizing their New York home, and a year later their boat, a Swan 56. Not cheap then or now, John says “We knew that ‘the extras’ that we wanted to build into whatever would be our choice of boat amounted to over £250,000”.
Handley Page built the Hampden and Halifax bombers for the RAF in the last world war; I recently discovered that my local branch of Wickes, in Cricklewood was the first Handley Page factory, back before Croydon was an airport.
Long gone, I then discovered that hidden in his back garden four doors down my street, a retired neighbour was building a plane in his garden shed. I couldn’t find any details, but over in Billericay Ashok Aliseril stumped up £160k and built a Sling TSi in a shed in his garden.
It did help that he’s an engineer by profession, and well supported by his wife throughout the Covid-era build.
Alternatively there is something sedately achievable within the Black Park model boat club if you’re not gifted with wood or mechanical abilities (that’ll be me then).
