Tell us what you've assumed in doing your numbers.

Yes.

And apologies if I have to look down because there are a lot of numbers here.

Essentially, we were comparing person A and person B.

We weren't very imaginative with the names this time.

And we assume that both of them are 55 years old, that they each have £75,000 left to repay on their mortgage over the next 10 years, that their mortgage interest rates are both 4% and remain 4% over the next 10 years.

And there are no early repayment charges.

And we should say that if that differential is bigger, if investments perform any better versus the rates on a mortgage, that advantage that we're seeing is going to grow of having your money inside a pension, isn't it?

Yeah

... have spent their whole lives saving, and then they find they're too scared to spend the money, or they wait too long, and they're not healthy enough to actually enjoy it when they can bring themselves to spend it.

There's also an economic issue that you've got these wealthy retirees sitting on piles of money and not doing anything with it, rather than channeling it back into the economy via spending.

And actually, it's such a common problem that there was a whole book written about the issue called Die with Zero by Bill Perkins, and Perkins' argument is essentially that, um, dying with lots of money left over is not a sign of successful financial planning.

Yeah.

Um, and then an extra £5,000 a year age 67 to 70, an extra £2,000 a year age 70 to 80, then an extra £1,000 a year age 80 to 90.

So in total, I am able to spend £46,000 a year in those first seven years, so up to 67, then £25,000 a year age 67 to 70, £22,000 a year age 70 to 80, £21,000 a year age 80 to 90.

By age 90, the, the pots basically run dry.

What

level of free state support are they getting? And you mentioned we have a UK figure.

the UK wasn't included in these European rankings.

So we tried to find the closest number we could get.

And this suggests that older households typically have around £503,000 in total wealth.

Which sounds like a lot and theoretically would place us second only to Luxembourg in the table.

But the key thing you need to know about this number is that in the UK, we include in the total wealth figures any benefits that you've accrued in a final salary pension.

What is that difference telling us?

Uh, and we've run some numbers, I believe, on this recently, uh, which give an indication of the massive difference that, um, opting out of pension savings at that, that sort of age can make.

Yeah, we looked at it from both perspectives, both increasing and opting out.

So we took a typical 25-year-old earning an average salary, and we calculated that if they increase their pension contributions by just 1% of their salary, so less than £7 per week, then they could end up with around 82,000 pounds more than they would've done by retirement at the age of 68.

And if they increa- their con- increase their contributions by 3% of their salary, they could end up with around £245,000 more by retirement.

Whereas on the opposite side of the coin, if they opted out of a pension even just for one year, then that could leave them around £20,000 worse off than they would've been if they hadn't opted out, even if they restart the contributions after that one year is up.

So you can see that these, what feels like a small decision when you're young, can really compound into a very large difference over a 40-year career.

Yeah

... opting out, and that is essentially part of your pay packet.

Give us a quick overview, if a quick overview is possible, of what can be gifted and then tell us the specific rule that we're going to concentrate on today.

Okay, so when people think about gifting, they'll often think first of the annual exemption, which allows you to give away up to £3,000 each tax year IHT-free.

But there are actually quite a few different ways of giving away money without incurring inheritance tax or IHT.

And that includes, for example, you can give away up to £5,000 to your child if they're getting married.

It's slightly less if it's someone other than your child getting married.

There's also the small gifts allowance, which means you can give away up to £250 to as many people as you like, provided you haven't used another IHT allowance on that same person yet.

that tax year.

So where's that line drawn?

she did better than Yasmin who was taking money out but then putting it all back in so probably had a greater exposure over that time that was a bit of a surprise to me at least

yeah for me it was one of the most interesting findings because at first glance you would think that Yasmin would do better than Nora because as you say more ultimately all of her money does end up invested whereas Nora's a lot of it will sit in cash for long periods of time But Yasmin's problem is that she is putting all of her money into the market at a time when it's already rising.

Everyone else is feeling much more confident.

The outlook is more positive.

So everyone else is also putting their money in.

So she's investing when prices are relatively more expensive, missing out on investing when things are cheaper.

And also by waiting, often you're finding that a lot of the recovery has already happened by the time Yasmin's investing.

Finally, then, Mariana, what can people do to prevent this sort of behavior and sort of reduce the temptation of trying to time the market in this way?

They get to the end and they're done.

Yeah.

It's such an important question that we need to be asking, particularly as pension ages go up.

And you're absolutely right that for some people, it won't be possible to work in their 50s and 60s.

For one, because they might be suffering from ill health having worked a manual job.

Other people might have caring responsibilities.

A lot of this cohort fall into the sandwich generation.

Yeah, what should people do if they don't want to work longer?